As per a Bond Brand Loyalty report, an average customer is enrolled in more than 14 different loyalty programs at any given time. In such a situation, it becomes extremely difficult to command a strong sense of loyalty. It becomes even more so when digital loyalty programs and channel loyalty programs are regarded just as a scheme and not as a way to strengthen strong bonds with customers and business partners.
Many businesses view their loyalty programs just as schemes. But they fail to realize that customer loyalty is crucial for every business. It’s indispensable for maintaining a positive and strong relationship with customers. American entrepreneur Joseph D. Mansueto once said, “Once you create a loyal customer base, it’s tough for a competitor to take that away.” The quote proves why loyalty schemes must evolve with changing needs of customers and channel partners.
At LoyaltyXpert, we have helped many businesses make a paradigm shift from viewing their customer loyalty programs just as schemes to potent tools for building and sustaining longstanding relationships. In this blog post, we have described how businesses can rethink their B2C and B2B loyalty programs to engage with customers and channel partners and keep them loyal for a long time.
Reinventing loyalty schemes
Faced with so many options, contemporary buyers and decision-makers do not like run-of-the-mill stuff, including loyalty programs. Even if a business has high-quality products or services, it cannot retain its customers for long if it relies on mediocre loyalty programs.
Apart from that, running a loyalty scheme is not easy in the present era. It takes time, effort, and dedication to create a successful loyalty program. That’s why you must rethink and reinvent your loyalty schemes before it’s too late.
Rethinking traditional loyalty point-based schemes
Traditional points-based schemes are not flexible enough to meet the rapidly evolving needs of customers and channel partners the way that new technologies can. A study conducted by Deloitte found the changing attitudes of customers and business partners toward traditional loyalty schemes.
In the study, about half of customers said that they like points-based loyalty schemes, while 47% of customers redeem their loyalty points and take advantage of all offers they receive through loyalty schemes.
But when it came to the experience a brand offers, more than half of customers said that the experience and brand communication is just as important as the loyalty scheme benefits while the same number of customers said that they would like the option of personalized rewards based on their purchase history.
The same research also found that when the customers were asked about their attitude toward loyalty schemes, about 42% of them said that they need more than points to buy from a brand. Even as participation rates in loyalty schemes were high, a majority of customers regarded being rewarded for their loyalty as the norm and not a differentiator. All these stats demonstrate why a loyalty program needs to go beyond point-based rewards.
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Traditional loyalty schemes can become a financial liability
Traditional financially-driven loyalty schemes are an effective way to reward customers and channel partners for their loyalty. But they can become a financial liability for businesses. Many businesses don’t identify the true costs of traditional loyalty schemes.
The major costs associated with traditional loyalty schemes are the costs of offering rewards such as points, discounts, free products, and more. When customers and channel partners redeem their points and avail of the offers they are eligible for under the loyalty schemes, the redemption costs may put enormous pressure on a business’s balance sheet.
Traditional loyalty schemes can be difficult to manage and may require considerable resources to run. Furthermore, businesses must also consider the cost of administering and marketing the loyalty scheme as well as the cost of any customer service issues that may arise. All these costs can accumulate quite fast and make it extremely unviable for a business to maintain the program in the long run.
However, on the other hand, reinventing traditional loyalty schemes can help businesses manage their costs and encourage their customers and business partners to buy more from them. By automating and streamlining their loyalty programs, businesses can reduce the costs associated with their traditional loyalty programs and run more cost-effective and efficient programs.
All in all,
For loyalty programs to be successful, they have to be more than just schemes. They must show your customers and channel partners how valued they are and you’re willing to walk the extra mile for them. That’s why traditional loyalty schemes must be reinvented to attract and retain contemporary customers and channel partners.
At LoyaltyXpert, we have helped a wide range of businesses across industries to rethink and reinvent their traditional loyalty programs. We can equip you with the right solutions so that you can do the same. If you’re curious to know how we can help, then call us today or book a free demo.