The Best Loyalty Programs Go Beyond Rewards

The article below was originally written by Shep Hyken  and was published by Forbes on March 25, 2017.

Most people think of loyalty programs as an airline that gives miles to frequent fliers, a hotel that gives points toward a stay or a restaurant that offers a punch card incentive. While these may be called loyalty programs, I’ll argue that they are actually marketing programs disguised as loyalty programs. And while I don’t have a problem with this concept, we need to have a clear understanding of the differences between loyalty and marketing.

Some customers choose to be loyal to the airline, hotel, restaurant, etc., because of points more than anything else. Human nature kicks in and the “member” of the loyalty program becomes fixated on earning points. That’s why passengers will fly an airline with which they have the most points, even if it means paying more for a ticket. The bottom line is that these customer loyalty programs do work to drive sales and create repeat customers.

Howard Schneider is the senior consultant for Kobie Marketing and a career veteran in what he calls “the loyalty marketing space.” Notice that Schneider positions those two words, loyalty and marketing, right next to each other.

Schneider says, “Savvy and strategic companies are now looking beyond these rewards programs to delight, create and retain loyal customers. They are looking to solve customers’ problems and soothe pain points.”

Loyalty-programs-quoteHe shared some thoughts on how smart companies are taking their loyalty to the next level. It’s more than just points, even more than marketing. It’s creating a convenient experience for the customer, one that customers want to use. In many cases today, companies are doing this by providing an app for customers’ smartphones.

For example, members of the reward program can download a mobile app to their phones and then use it to check the status of their hotel room, check in when the room is ready and even use the phone as a key to get into the room. All of this without ever having to visit the front desk. Once you learn how to use it, which is a simple process, you find it more convenient to do business with Hilton. And, the company that is most convenient and easy to business with wins.

Then there are what Schneider refers to as lifestyle apps, such as those offered by Starbucks and Walgreens.

The Starbucks app is the perfect example of this. In addition to a rewards program, the customer can use the app to place an order, pay for the order and even access streamed music. As members earn stars toward rewards in the My Starbucks Rewards program, they can redeem the rewards in real time. The app reinforces the Starbucks brand as a lifestyle enhancement.

Walgreens has an app that allows customers to refill prescriptions, monitor their orders, pay using their phone, and earn and redeem awards in the Balance Rewards program. Like the Starbucks app, it is a lifestyle app that keeps Walgreens top of mind with its customers.

And, you can’t talk about loyalty programs without mentioning Amazon Prime. When the program began, the membership fee paid to Amazon provided Prime members with free shipping. Today there is much more. For $99 a year, the program offers not only free shipping, but also other benefits such as live streaming music, movies and TV shows, storage for digital photos and more. Amazon Prime is integrated into the customer’s life. For the person who takes full advantage of the Amazon Prime membership, the benefits can far exceed the annual fee. And as a result of paying for a membership, the customer will buy more often from Amazon. Amazon also offers apps for its website, music, TV and movies and more.

Customers will remember their experience with a brand long after they’ve forgotten a discount. Companies cultivate true customer loyalty by making customers’ lives easier and making sure each engagement – whether in-person or in-app – is valuable for them,” says Schneider.

When a rewards program can be moved from a punch card to an app, opportunities to interact and build customer loyalty grow exponentially. Points, miles and punch cards are just the start – an app can include features that are limited only by imagination. And the convenience of using an app is a powerful driver of loyalty. It’s human nature to stay with a company that is easy to do business with. Once customers know how the company operates and how to use the website or mobile app, they can rely on a consistent experience, and customers like consistency. It creates confidence. That’s what drives loyalty.

 

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