The anatomy of an ideal loyalty programme

Today, there is an abundance of psychological data available that attempts to explain human behavior, from our experiences and how our environment shapes us, to our buying and spending habits. Experts from all different kinds of fields will look at this data to see how it can best serve their businesses. 

Brands have long been tapping into research to see how they can best win over customers. For example, the psychology principle ‘The Law of Effect’ coined by Edward Thorndike states that behaviour followed by a ‘satisfying effect or consequence is more likely to be repeated in the future’.

Loyalty professionals, in turn, can use research like this to think about how to shape loyalty programmes. For example, rewarding shopping behaviour to encourage repeat purchase among customers. This is just one of many ways this can be done.

Making programmes useful

The Law of Effect is just one way, amongst many, to impact customer behaviour. For existing loyalty programmes, it’s important to think about exactly what keeps your members engaged.

We know that loyalty programme members spend, on average, up to 40% more than customers who aren’t loyalty program members. So, through this, we also know there’s value there in having active and engaged members.

The real mission then, is ensuring these customers remain engaged.

In a world where consumers are now a lot more focused on the value programmes can bring for them, we’ve put together some features that we believe, used collaboratively, can help brands to form the ideal loyalty programme.

The ideal programme: what’s the recipe?

1. Making use of technology

Right at the top of the list, we can identify a clear need for one component that’s prevalent in virtually any industry or field. Technology. In this digital age, it’s undeniably important that brands position themselves well online, making their services as accessible and engaging as possible. This is often seen through a brand’s website, their app and general online presence.

We’ve seen evidence from this in recent data from Sweor, which tells us that 57% of internet users won’t recommend a business with a poorly designed website on mobile. A further 38% of people will stop engaging with a website if the content or layout are unattractive, in data from Adobe.

Utilising technology should make such processes faster and more seamless. A satisfied customer can potentially become a loyal one, however an unsatisfied customer is likely to stop engaging. A specific way that technology can be used within loyalty programmes is in mobile apps, this could be for tracking loyalty points balances, seeing redemption options and keeping your customers up to date.

Small features like this can go a long way in helping customers to engage with your programme.

At IAGL, we take pride in creating a good experience for our customers. The newly revamped Avios website, as of April 2024, has been improved to provide customers with the better experience we speak about above. The changes include a prompt to help users with getting started plus simple instructions on joining the programme, communicated in a way that simplifies and unifies the enrolment process with the partner airlines. In other words, a simpler and more straightforward experience. 

2. Market your brand and communicate with your consumers 

Put briefly, marketing can sometimes be annoying. But marketing isn’t meant to feel forced or interrupt us in any way. When communications are relevant and interesting, customers are a lot more likely to listen, and even take action. This can be done in a few ways:

• great user experience from design to functionality 
• exciting and inviting copy 
• a seamless earning process and rewards that make it worth it

Crafting compelling content for your customers is important, but choosing the appropriate channels and timing for message delivery is equally as important.

Your customers are more likely to engage with messaging that resonates with their needs, preferences, and lifestyle. Therefore, as a brand, it’s worth investing time in understanding your customers and segmenting them accordingly. Ultimately, you want the right messages to reach the right audience at the right time.

Another important aspect is the authenticity of your brand's communications. It's important for brands to demonstrate their appreciation for their loyal customers by offering meaningful rewards and experiences, not just sales pitches.

The key is not to think about quantity but quality. It’s not about the volume of emails or messages sent but the value of the content for your customers. By ensuring relevancy, genuine interest, and personalisation, brands can significantly enhance their customer loyalty initiatives. 

3. Use data to drive personalisation 

If a brand consistently recommended products or services you didn’t use, had never purchased in the past, or had little interest in, it’s likely you’d lose customers very quickly.

As we mentioned in one of our most recent articles on personalisation, the most successful brands use the data they have on their customers to offer a tailored and rewarding service.

There are various streams of data a company may collect from their customers, and this can then help them in several ways. From predictive analytics which can help you anticipate member wants and preferences, to segmentation to help brands better target loyalty ads and comms.

For example, in our roundtable last year we acknowledged the need for brands to adhere to the preferences of their consumers. Google’s Finnbar Cornwall gave an example of giving customers communication options based on their preferences.

 “Whilst sometimes people want the in-app chat as that’s the quickest way for them to get an answer, sometimes they might want to phone up and talk to someone,” he says.

This is a great way of offering choice, making the service more personalised and therefore better for your members. In our most recent article on personalisation, we speak more about ways in which loyalty programmes can be better suited to consumers.

This goes hand in hand with relevant personal communications to your customers. 

For example, giving them updates on their points balances (how near they are to redemption/what they can redeem with current balances), as this can create excitement to continue racking up points to gain rewards.

This thinking is supported by the Goal Gradient effect; the idea that the closer you are to a goal, the more likely you are to strive to achieve it. Ogilvy’s Behavioural Science practice identifies this as crucial in crafting loyalty programmes and this also further supports the importance of communicating your customers’ progress with them.

Another example is the Sainsbury’s Nectar card.  The supermarket chain uses customer data to provide their members with tailored discounts and suggestions. One of the reasons this programme works so well is because customers are able to see the direct benefit of their loyalty through product discounts and deals that actually appeal to them.

Retail loyalty statistics tell us that 80% of customers say they are more likely to do business with a company if it offers personalised experiences. Furthermore, 45% of Gen Z and Millennials said they wanted personalised product recommendations.

So, if you want happy customers, personalise the service. In addition, offering choice can be useful too.  

4. Find values that align

It’s important to remember the unique purchasing power that every consumer holds. As well as looking for deals and attractive offers, we’re seeing consumers show a greater interest in how the places they shop reflect them as people.

Gen Z and Millennials are the most likely to make purchase decisions based on personal, social, and environmental values.

Furthermore, purpose-driven consumers, who choose products and brands based on how well they align with their values, now represent the largest segment (44%) of consumers, according to data from IBM.

Where consumers are thinking more deeply about where they choose to spend their hard-earned coins, it gives brands a greater opportunity to express these values in the hope of attracting customers who care and can resonate.

As a brand wanting to build loyalty, it could be a good idea to think about ways in which your loyalty programme could reflect the values you already embody (as they are ultimately part of the reason your members engage with you).

For example, members of the British Airways Executive Club can also use their Avios to donate to vast number of causes supported by the BA Better World Community Fund.

Another example is the footwear company, TOMS. For every pair of shoes purchased, the brand donates a pair in turn to children in need from the marginalised communities they partner with across 11 countries worldwide. They do this alongside a loyalty programme that allows their members to earn points, through both spending and social media engagement, which they can redeem on items or to charity through the brand.

When a brand takes the initiative to align business practices with social, environmental, or personal values, it can help to create a deeper connection with its customers. This sense of shared values and purpose fosters a strong emotional bond between the customer and the brand, enhancing customer loyalty.

Ultimately, brands that stand for something more than just their products or services are likely to inspire greater customer loyalty and advocacy.  

Tying it all back to experience

In discussing the anatomy of an ideal loyalty programme, we cannot overlook the profound impact of creating an emotional connection between brands and their customers.

When brands take the time to listen to customer feedback and implement changes based on that feedback, they demonstrate that they value and respect their customers' opinions. This improves the programme and once again strengthens that bond between the brand and its customers. It shows that the brand is attentive and committed to providing an experience that meets customer needs.

Additionally, offering rewards that are relevant and meaningful to customers' interests enhances their loyalty. Whether through exclusive discounts, tailored recommendations, or points that can be redeemed for desirable products or experiences, personalised rewards show customers that the brand understands and caters to their preferences. This personalised approach makes customers feel valued as individuals, not just as part of a collective customer base. 

The usability of the loyalty programme also plays a crucial role in customer satisfaction. An easy-to-use platform that allows customers to effortlessly earn and redeem points can significantly enhance their overall experience. Mobile apps that provide real-time updates on points balance, redemption options, and personalised offers make the program more accessible and engaging. When the process is straightforward and user-friendly, customers are more likely to remain engaged and loyal.

Ultimately, the essence of an ideal loyalty programme lies in providing a consistently positive experience for customers. In a world where consumers are inundated with choices, simplifying interactions with your brand can make a significant difference. By building emotional connections, offering personalised rewards, and ensuring ease of use, brands can create loyalty programmes that not only attract but also retain customers.

For more information on creating experiences that are memorable and worthwhile, and building the ideal loyalty programme, please do not hesitate to contact us here.