The Loyalty Program Is Dead, Long Live the Loyalty Program
The best loyalty programs both recognize and reward customers. The recognition part can be especially powerful in that it taps the social science principle of Exclusivity/Scarcity, in which people place more value on things that are not readily available. And, giving participants a "head start" can also be very effective, in that it triggers the Zeigarnik Effect — social scientists have found people are more apt to finish what they've started. So, in a very simple example, giving 2 punches on a punch card of 12 can be more motivating to make 10 more purchases than simply having a punch card of 10 with no boxes already punched.
Engage with your customers across multiple channels in a two-way dialogue that acknowledges who they are and reinforces and rewards the value that they bring to the brand. This requires continually asking for customer feedback, and responding to this feedback in real-time, throughout the customer relationship. Deliver information and experiences that are based on the customer’s previous behaviors and attitudes. This is called “smart” personalization and is based on the data that you have about your customers. However, the most valuable data is “human data” which is self-profiled, and thus can be used to further engage with your customers in a meaningful way because it is actionable and provides greater weighting since it comes from the customer.
Member preference centers are gaining in popularity and are a great tool to use as part of the onboarding process for new customers. This online portal allows members to indicate communications preferences, needs, and interests. These preferences, in combination with other customer data (demographic, self-profiled psychographic, and segmentation profiling) can be used to deliver truly personalized communications.
Successful loyalty programs are built on data-driven customer insights. Segment your customers based on current and potential value in your database, and treat consumers who are most valuable differently than those who are less profitable, e.g. a customer VIP service that can take the form of exclusive events/alerts, involvement in influencing new product trials, etc. In addition, give these most valuable customers the opportunity to advocate for your brand through social media and reward them through social rewards and by telling their story.