How to Succeed & Gain Brand Loyalty in an Over-Saturated Market of Points Programs?
- Posted on August 9, 2022 by Robert
- Reading time about 6 minutes
We know that the loyalty landscape across all industry verticals has transformed over the years and is now flooded with meaningless points programs. Many leading businesses have implemented the most basic as well as advanced loyalty programs built taking reference to the copies of successful programs.
In this over-saturated market of loyalty programs, many overlook the main purpose of loyalty, which is to drive deeper engagement with customers by delivering true value. In this blog, we will find out everything we need to know about the development of an effective Loyalty Points Program and how your brand can survive in this competitive market to boost brand loyalty to the next level.
Why do Many Loyalty Points Programs fail?
A poorly developed loyalty strategy that lacks value and transparency is one of the main factors that lead to the program’s failure. This causes customers to increasingly dismiss the idea of joining a points program simply because they consider it as a mere & normal points program like any other that they have used before. The eventual death of points programs is becoming a hot topic among many loyalty experts & industry professionals.
“The points programs will be gone in coming 5 years,” says CEO and Founder of Cashrewards, Andrew Clarke in 2016. In another statement, Shell Global Loyalty Programme Manager, Pavel Los in 2019 said “points are dead”. Apart from these stats, COVID-19 further played the main role in the perception of points and their value. It is because of the frustration experienced by program members due to limited earning of points, not enough points for redemption & a poor overall experience in engaging with the reward programs.
Reward Types that are on the Rise- Cash, Discounts & Credit
Gone are the days when people appreciated earning some percentage of their spending in the form of points reward! Customers today are now finding greater appeal and value in credit, discount & cashback programs making it a standard set by highly rewarding loyalty programs. In the study conducted for the preference value of reward type, customers identified that points-based programs ranked at 4th position where cash credits were preferred the most and placed at top position followed by discount vouchers, free surprise rewards & Gift Card Loyalty Program.
What makes cash/credit rewards the most preferred option?
The answer is clear; they are quantifiable and can be easily tracked with the clear value attached with it unlike with points. Customers also feel
credits come with more ownership because of the easily understandable cash value i.e. this is my money just like a physical currency.
On the other hand, points are not very clear in terms of their value exchange, which is why they are easily forgotten and expired. Another reason is the long process of redemption process taking several steps to get the final reward. This shows how customers today value convenience and ease over anything.
Despite the loss of interest in points-based programs, points reward continues to dominate the loyalty market in many business firms across the industry. Some examples of renowned loyalty programs that offer points are Qantas Frequent Flyer, Woolworths Everyday Rewards, etc. This is a sign that you can still use the points-based program if you can provide sufficient value to the program members.
How to Deliver Value Through Your Points Program & Attain Maximum Business Outcomes?
Your customer is the king in any business, irrespective of the industry type you belong to. To offer value to your target audience, you need to know them properly. That is why customer data plays a top priority to help you lead the way to success. Big brands are now using loyalty programs to get access to valuable customer data & offer highly personalized offerings to win their hearts. It doesn’t really matter if the points program you are using is engaging or not, as long as you can extract data from it.
One brand that has dominated the fast food industry for many decades is famous McDonald’s & they hardly needed to build MyMacca’s point program for increasing brand awareness. Wondering why McDonald’s came up with this rewards program? DATA, they need data-customer data to help them know more about their customers.
As per the report in 2022, McDonald’s CEO disclosed that they only have 5% access to customers’ data- who their customers are, what they usually bought & what they bought earlier. Their main target was to increase the number to 40% with the help of a loyalty program.
What is the secret? Use Data & Value Together to Drive Loyalty
After going through the section above, it is evident that loyalty programs act as an excellent way to gain customer information especially zero-party data (data that customers willingly share with brands for improved and better offerings). Having access to this data enables businesses to build a single view of the customer helping them get meaningful insights stated below-
1. Transactional Data– To know the average spend of each customer and the frequency of order
2. Personal Data– To get information like name, email, mobile number, etc.
3. Behavioral Data– To find from which channels the customers have interacted with
4. Demographic Data– To gain access to their gender, employment status, and age?
5. Generational data– To know the type of generations (e.g., Millennial vs Gen Z)
6. Preferential Data– To know the product preference type of the customers
7. Geographic data– to know their location & how close are they to avail rewards
What will you do with all the above information? They are essential to enhance personalization efforts across all areas like personalized messaging to increase open/click rates, building relevant/targeted offers to increase engagement, and customer segments to create tailored rewards for the right customers & maximize redemption rate.
PERSONALIZATION is the key to the success of any loyalty program as it helps to build stronger bonds with customers and retain them with higher engagement, eventually leading to the success of your loyalty program.
As discussed above, the key to loyalty program success is their capability to deliver value to those who matter the most i.e., customers. Following a one-size-fits-all approach will not be successful in terms of developing the loyalty program as it won’t help in offering relevant rewards to your customers. Customers now consider a program that offers higher convenience, better personalization, great customer experience, and more.
Novus is an all-in-one Loyalty Program Platform that helps brands across the globe to build highly personalized loyalty solutions & meet the specific needs of individual customers. If you are thinking to build a points-based loyalty program, you are not late. However, you must take experts’ help to focus on core elements that can make your points-based loyalty program a success. To see how Novus can help, connect with our experts & take a quick demo & build the right loyalty program of your choice.