Customer loyalty is among the biggest challenges for marketers, and more broadly, for brands. For a good reason, loyal customers are easier to approach. How can a brand manage to keep a long-term relationship with its clients? Well, it simply tries to engage with them through a loyalty program.
Such a program is a formidable retention tool, but brands often mistakenly think implementing it will be sufficient to convince consumers to come back. Of course, not having a loyalty program would result in giving an advantage to competitors who do have one. However, to really make it worth your while, it is essential to make it a lively and unique program. Why not use digital gift cards to stand out?
Most loyalty programs cannot be told apart
Obvious benefits for brands
Setting up a program is the first step in a customer loyalty strategy. In fact, many brands decide to implement one because they come with numerous benefits:
- Repeated purchases: customers who subscribed to a loyalty program are more likely to buy again in the brand’s PoS. With the right incentives at the right time, customers will be much more motivated to act on it.
- Retention: a good loyalty program has the ability to considerably reduce consumers’ inclination to go to the competition. A well-rounded and successful program can even make consumers significantly less price-sensitive.
- Revenue increase: with loyalty programs, brands can segment their customers according to their purchasing potential and better value high shopping baskets.
- Average shopping basket increase: customers are led to buy more products with loyalty campaigns.
- Improved customer knowledge: if they subscribe to a loyalty program, consumers are more easily identified, and their behavior in PoS can be analyzed. It enables brands to offer services and products which better match their expectations.
But programs that all use the same loyalty tools
But to reap these benefits, loyalty programs must be different from those of competitors. Unfortunately, that is far from the case. Once implemented, brands struggle with creating a unique loyalty experience. If we take a closer look, we can see that programs use the same tools and work on a similar basis.
For example, if we consider mass retail loyalty programs, it is complicated to explain why we would choose one over the other. This explains why consumers have several loyalty cards in these different brands. A 2015 census report released by Colloquy found that while a typical U.S. household is enrolled in 19 to 29 different loyalty programs, it only actively uses five to 12 of them.
Investment in loyalty is booming, brands even cut on their margin to prioritize customer loyalty with cashbacks, vouchers, coupons, promotional texts and emails, … Some of the biggest brands even spend hundreds of million dollars each year to retain customers.
With these growing practices, customers have grown used to not paying the full price. Discounts are no longer an exception, but the norm, and they expect them all year round. Promotions are no longer seen as rewards by consumers. Does that mean they should be discarded? Of course not.
How can your loyalty program be successful?
Use customer data
Discounts remain a big part of loyalty programs. But consumers are not only motivated by prices. Sure, there are smart-shoppers who will do anything for a good deal, but others will prefer to base their relation with the brand on other elements. Some are more sensitive to the additional services offered, some are more in a hedonistic mindset, and some still give a lot of importance to the social aspect of the program.
It is entirely possible to consider the needs and preferences of each consumer. With new technologies, it is very easy to gather enough information on different types of customer. It is also easy, for each of them, to offer a personalized program and relevant rewards that influence their purchasing behavior over the long term. Preferably rewards that will give them a good reason to decide to keep on buying products from your brand.
Choosing the right rewards
Rewards must be delivered optimally throughout their subscription to gradually win consumers’ trust and build commitment on the long-term. A welcome gift when they subscribe to the program is a great incentive. And then, once they are on board, the rewards can gain value as time passes and as their relationship with the brand evolves.
It should be noted that rewards must not be too difficult to earn, but not too easy either. You must find the right balance to create the necessary motivation to influence the consumers’ behavior.
Another key fact: rewards should be easy to use. Customers must not feel forced to use it, nor find obstacles in the process. Finally, it is highly recommended that the rewards remain in line with the brand’s identity. Customers expect benefits that match the brand’s image.
E-gift cards, a meaningful reward
Gift cards, an efficient loyalty tool
In loyalty programs, gift cards are seen as an efficient reward by both consumers and brands.
First of all, because it can easily be used by customers. In its digital format, it is immediately available for use. Consumers can choose to redeem it now or for their next purchase.
For brands, it is a reward that can be created almost instantly. Gift cards are a powerful tool that can draw consumers to the brand’s PoS. They put customers in the perfect mindset to spend more than the average shopping basket. For several years now, consumers have proven to consider gift cards as “money already spent” and take advantage of that to try out products they would not normally have bought.
Gift cards reflect the brand and convey its values. One single card represents both loyalty and the brand’s identity. It makes it a powerful and meaningful tool.
E-gift cards must be used wisely
However, just like any tool, they should be used in the right context and with the right customers. Digital gift cards are flexible rewards, they can easily be adapted to each type of consumer.
- Hedonistic consumers: they are looking for the pleasing part of shopping. For them, receiving an e-gift card from a brand means they will be able to really indulge.
- “social” consumers: for them, gift cards are similar to a present gifted on special occasions, like birthdays. Receiving one from a brand will mean more than a simple discount voucher.
- Bargain shoppers: Always on the lookout for good deals, giving them a gift card with a certain amount for a specific product range can encourage them to make a purchase. Gift cards, in some ways, can be used as a form of discount.
Careful, nonetheless, as to how you give the card to customers. Because it will not have the same value depending on each of them. For example, for hedonistic consumers, it is better to give them a gift card in exchange for a certain number of loyalty points they have gathered, or simply to thank them for being loyal customers.
For “bargain shoppers”, you should not introduce it the same way. The value of the gift card must be directly linked to a product or a product range. For instance, for one high-tech product bought, the brand can give them a gift card of a set amount. It will feel like a promotion and this technique has the advantage of making them come back to redeem the card.
There is another element you should bear in mind when using gift cards in loyalty programs. Although many customers are comfortable with digital gift cards, some will prefer plastic ones. In any case, it is important to make sur the cards are omnichannel, meaning that they can be used in the brand’s physical and online stores.
As explained, for brands, loyalty programs are strategic assets in customer retention. The challenge is not as much in the implementation of the said program as it is in the creation of a real loyalty experience for current as well as new customers. Consumers have endless choices of loyalty programs, it is important to be able to stand out through meaningful and high-quality experiences. For example, by giving out rewards such as digital gift cards, which unite customer motivation with your brand values.
Suggestions for further reading
Why set up a digital loyalty program?