10 Ways to Liven Up Your Loyalty Program

3. TAP INTO CAUSE MARKETING

Though giving customers the option to share rewards with friends is a solid strategy for improving loyalty program engagement, providing customers with an opportunity to use their points to help those in need can be an even more promising approach. Partnering with organizations that support disease research, help victims of natural disasters, or provide funding for other causes humanizes brands and demonstrates that they care about those around them, which attracts customers.

Forty-two percent of American consumers say they are willing to pay more for products and services from companies committed to having a positive social and environmental impact, according to a 2014 Nielsen study. There are different types of cause-related loyalty programs. Footwear company Toms, for example, uses a one-to-one donation model, meaning it donates a pair of shoes to someone in need for every pair that's purchased. Hilton, on the other hand, allows members of its Honors Rewards Club to convert their points into monetary donations to charitable organizations.

No matter the specifics of the strategy, incorporating cause marketing can have a strong effect. "Talk about an intrinsic reward! From an emotional standpoint, there are few things that make customers more loyal to a brand than knowing that together, they're helping someone in need," Parr says.

4. DETERMINE CUSTOMER POTENTIAL, AND PERSONALIZE ACCORDINGLY

Even the most loyal customers have different spending potentials, and to maximize the benefits of individuals' spending power, companies should build a fluid loyalty program that is tailored to consumers' specific buying habits. To determine customers' potential, brands have to look at their best historical activity—for one customer, that might mean 10 purchases in a certain timeframe, but for another, it may mean five.

"Once you understand that potential, you can start creating more personalized programs that reward customers for their loyalty in a way that correlates with their buying behavior. In other words, if a customer's highest potential is eight purchases per month, offer a reward on the ninth purchase," Andrew Robbins, president and cofounder of Paytronix, a company that builds loyalty programs for restaurants, says. By personalizing the rewards structure to reflect customer behavior, brands not only avoid losing customers who feel as if they aren't benefiting from the rewards program because of the high threshold, but also avoid losing money by not giving out rewards to customers who consistently surpass that same threshold.

5. REACH ACROSS CHANNELS

With the growing prevalence of smartphones, companies have jumped at the opportunity to build mobile-friendly, app-based loyalty programs. Thanks to mobile devices, many of the barriers to loyalty card use have been eliminated. Applications such as Apple's Passbook have enabled consumers to store all of their digital loyalty cards in one place to avoid losing or forgetting one when it is needed; social plug-ins that integrate with popular apps such as Facebook, Instagram, and Snapchat have simplified the sign-up process; and brands' own native apps have made redeeming rewards more intuitive. But great loyalty programs aren’t built on one channel, Jim Davidson, head of research at marketing automation platform provider Bronto, says.

Other channels, especially email, have to be in sync with a brand's loyalty program to promote regular engagement and give customers "a reason to come back to the store or the site and shop again," Davidson says. This can be a particularly effective strategy for brands that sell products that consumers need to reorder or replace. For example, Shar Music, a company that sells string instruments and accessories, worked with Bronto to launch an automated and personalized email campaign that reminded customers to purchase new strings for their instruments every six to eight months, as suggested by instrument manufacturers. The campaign delivered a 9 percent click rate and a 26 percent conversion rate, but perhaps more importantly, "made customers feel cared for," according to Davidson.

Consumers appreciate useful reminders or suggestions, but while mobile technology now plays a major role in loyalty programs, receiving reminders as texts or push notifications can still seem invasive and overwhelming to consumers. "That’s why a cross-channel approach is important for augmenting loyalty programs in between purchases," Davidson says.

Related Articles

The Surprising Key to B2B Customer Loyalty

Customers expect ease, not delight.

Take the Guesswork Out of Loyalty

Re-architect customers' journeys to deliver a unified brand experience.

5 Steps to Earning Customer Loyalty

Boost repeat business with superior customer service.

Don't Underestimate the Link Between Customer and Employee Loyalty

Lessons we should all learn from Market Basket.