“So, who needs a customer loyalty program?” Seems like a pretty basic question, doesn’t it? It’s hard to believe that any successful enterprise today doesn’t already have one.

And it’s also a reality that many enterprises already do, but could do better. With that in mind, let’s articulate three steps for how loyalty programs should work if you want them to succeed.

Step 1: Average is average. Don’t be average

Whether you already have one, or whether you need to set up a loyalty program, be aware that many such programs today fail because of an unclear customer promise, limited credibility and trust, lack of reward relevance and low levels of emotional intelligence when interacting and recognizing customers. Marketers should stop making average stuff for average people while hoping they can charge more or get more than a commodity price or emotional response.

The consequences of this approach are undifferentiated loyalty & customer engagement programs that fail to drive long-term customer relationships and a positive brand impact.  As customers’ trust in brands continues to erode, loyalty marketers need to turn their loyalty marketing program into an essential component of their brand strategy and a key enabler of compelling and consistent long-term relationships with their customers.   

To reap all of the benefits from their brand loyalty strategy, senior marketers must make sure that they define compelling customer value at each stage of the customer lifecycle, drive personalized and interactive experiences and rewards, and get top management buy-in to activate all departments around the brand loyalty strategy goals.

Step 2: Avoid these pitfalls

Many enterprises struggle to differentiate their programs from their competitors’ efforts in the marketplace. This means they struggle to create lasting loyalty or to deliver distinctive experiences because they:

Lack differentiation. Despite the proliferation of loyalty programs, consumers struggle to perceive the uniqueness and distinctive value to them. To avoid the path to further commoditization customer loyalty programs need advanced segmentation, highly relevant targeting, digital gamification, unique partners and enriched customer experience to set them apart.

Lack advanced targeting capabilities. Untargeted programs reward every consumer with the same rewards. This spray-and-pray strategy increases costs without improving customer engagement. To build customer relationships, loyalty programs should further personalize program mechanics, experiences and rewards, maximizing emotional attachment and brand preference.

Lack an overarching strategy. Too often loyalty programs operate separately from the firm’s marketing and strategy goals. This may result in excessive focus on short-term commercial targets and decreasing synergies with the overall media and marketing budget. To add value to the bottom line, loyalty programs need a strategy that connects to the overall business goals of the organization.

Brand loyalty is the result of a series of compelling brand experiences that, over time, lead a brand to achieve sustainable differentiation and sustain customer preference. To achieve loyalty companies must aim towards engaging with customers to develop a mutual exchange of information. Such an exchange enables the brand to develop actionable insights informing highly targeted & dynamic communication, loyalty mechanics, promotions, products, and service offerings that deliver higher customer value, brand preference, and ultimately brand loyalty.

Step 3: Get on your cycle

A winning loyalty strategy starts and ends with the brand experience and includes a cycle of customer engagement, interaction data, and actionable insights, which in turn enables marketers to continuously improve, refine, and customize compelling reward & brand experiences. Adopting a brand loyalty strategy gives marketers the opportunity to shape a more human brand experience; a brand that knows its customers, can recognize them, and is relevant to them.

This approach to brand loyalty will give marketing leaders the data and insight to:

Foster higher engagement and advocacy:  A comprehensive segmentation strategy armed with real-time triggers, contextual offers & communications and gamified interactions will enable a better brand experience and value exchange increasing customer trust and advocacy. Orange Belgium’s Thank You loyalty program simultaneously rewards customer tenure and value though a mix of evolving lifestyle rewards and telco benefits keeping participation and excitement high.

Greater cross and up sell: A superior awareness of customers pain points, behaviors and attitudes enables a more human and precise level of intervention along the customer lifecycle maximizing cross and up sell opportunities and long-term brand satisfaction.  An integrated approach – engage, interact, reward, optimize – optimizes budget allocation decisions and campaigns performance. All this contributes to the development of long-term and profitable relationships.

 Define service and product features that adjust to evolving customer behavior: Loyalty programs provide an important source of data. By turning this data into actionable insights, CMOs can improve and redefine the brand’s core value proposition and deliver new brand experiences that better match customer needs.

Deliver higher customer value across categories and channels: A strategic view of loyalty marketing will help organizations look beyond the immediate contribution that promotion and offers can generate, and calculate the value of the acquired customer over time and across channels.

Enhanced performance in contract renewals, service upgrade and retention journeys: A comprehensive loyalty brand strategy enables marketers to execute tailored lifecycle marketing programs that generate more frequent brand engagement, which in turn provides rich actionable data that helps marketers continuously refine rewards, offers and targeted messages. Orange Spain has substantially increased ARPU levels by systematically addressing customer signals, behaviors and request in a fun and interactive way.