10 Ways to Liven Up Your Loyalty Program

6. OFFER A FLEXIBLE FRAMEWORK

Whether companies like it or not, most consumers are enrolled in dozens of competing or overlapping loyalty programs—just because a passenger is a frequent flyer on JetBlue doesn’t mean he’s not booking half of his trips with Delta Airlines, for example. For brands, this means embracing an age-old mantra: “If you can’t beat them, join them.”

The concept may seem counterintuitive, but according to Points’ Barnard, companies that empower customers to convert their rewards into points honored by a competitor succeed at creating lasting loyalty in spite of their willingness to side with the enemy, so to speak. "Loyalty isn't exclusive, and brands are starting to realize that rewards points are a currency. It fluctuates, it moves from person to person, but it can lose value if no one is using it," Barnard says. And, as with any other currency, there's an exchange rate.

Transferring points between two companies is more complex than transferring points between customers of the same company. Points facilitates the former on its Web site, and enables its registered users to convert miles earned with, say, Alaskan Airlines into United Airlines miles at an exchange rate that can vary from three to one to as high as six to one, depending on how competitive the brands are, Barnard explains. The company is also currently working on an early-stage product that connects its users in an exchange marketplace where they can barter for points, miles, or rewards. "If a customer wants to get rid of some miles, we can match him or her up with another customer [who's] looking to swap those miles for other rewards," Barnard says. In this scenario, users would determine the exchange rate themselves.

Points has gained a significant following in recent years—the company has more than 4.3 million users, and Barnard attributes its success to flexibility. "One of the biggest drawbacks of rewards-based loyalty programs is that rewards don't have any value outside of that specific brand environment. We’re making that belief obsolete. And the brands we work with stand to gain from this as well, because the more value customers attribute to their loyalty programs, the more likely they are to participate," he says.

7. RUN A CLEAR CAMPAIGN

There's no such thing as being too straightforward with a loyalty program and the marketing content that surrounds it. "Participation in a loyalty program is highly connected to communication," Rhonda Basler, director of customer engagement at Hallmark Business Connections, the B2B arm of Hallmark Cards, says. Hallmark Business Connections helps organizations launch loyalty and engagement programs, and Basler says that regardless of the program details, clarity is key across the board.

Experts unanimously agree that Starbucks' loyalty program is one of the best performers on the market, and the brand's commitment to clear messaging is a large part of why the program is so effective. The premise is simple—customers can earn a free drink or food item after making 12 purchases at Starbucks locations using their membership card or the Starbucks mobile app. But what sets Starbucks apart from brands that offer similar programs is that while most brands only tout their loyalty programs at the register, Starbucks markets its program all around its stores.

When Starbucks acquired tea vendor Teavana in 2013, for example, the company launched a marketing campaign to inform customers that the Starbucks loyalty card could now be used at Teavana as well, and that those purchases would also count toward the 12 required for a reward. Signs were displayed in seating areas and on the chalkboard menus, as well as at the register.

On the mobile side, Starbucks also keeps customers informed about how many points they have to earn before the next reward. The amount is displayed on the home page of the app, so customers don't have to look for it. "It's always highly unlikely that customers will go and seek out information about the program actively," Basler says, "so it's up to companies to keep customers informed."

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