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When we think about customer loyalty programmes, our minds automatically point to, well, points. Points based programmes are really where it all started but, they have received their fair share of negative publicity recently in some consumer groups. The reason for this is, to be honest, more about how the programme is created and managed rather than the actual mechanic. Much more importantly is the way that brands turn points into prizes – or rewards.
Pointing loyalty in the right direction
As every major airline will tell you, points based programmes are a great way of targeting high value customers by identifying, acquiring them – and retaining them. Although points programmes are the most well known and, remain incredibly popular, they may not be the right fit for your brand. One really effective alternative is the Reward and Recognition Programme. A more personalised and subtle option, Reward and Recognition programmes tend to offer VIP type rewards and retain their air of exclusivity by avoiding super-commercial advertising. This is often how luxury brands build their customer loyalty programmes.
Although both Points Programmes and Reward and Recognition Programmes can be used to great effect, they’re not ‘one size fits all’. Deciding which option is the right one for your brand is a decision which should be based on a number of factors including your product or service, your target audience and your particular sector of industry. Here, we take a look at some really important things to consider when choosing the right programme for your brand.
Flying high with points
Airlines are perfectly placed for points programmes due to the fact that they process a really high volume of transactions. Similarly, businesses such as hotels and large retailers also benefit from the consistency and scalability offered by points programmes on a worldwide basis. One of the most important parts of a points programme is currency transparency – customers should always know how to earn points and the number of points needed in order to reap particular rewards. This transparency and customer control is vital for the success of any points programme.
Aim high but stay low
The holy grail of loyalty programmes is the ability to offer rewards of a high perceived value at a low cost to your business. For example, airlines sometimes offer empty seats to their top customers. Although this does not, in essence, cost the airline much, it is considered of high value to a customer. Unfortunately, this high value is dissipated when customers have limited choice with free flights with tax charges on top; in which case this remains low cost but also becomes low value. Other examples of the value principle come from the hotel industry in the form of early check in, late check out, free breakfasts and room upgrades – all of which cost the hotel next to nothing but are regarded as desirable by customers. Every business is different and, each needs to communicate with customers to find out the rewards they find desirable.
Keeping it fresh
Recognition is a key driver when it comes to customer loyalty programmes. Also known as ‘substantive’ loyalty programmes, recognition works on the basis of forming long term relationships by offering new and unexpected rewards. Offering rewards such as upgrades, VIP service and access to VIP areas and lounges, all help to build brand cheerleaders, advocates and ambassadors. Offering a customer something they’re not expecting – a free drink or an invitation – considerably strengthens the brand / customer relationship.
Taking the time to find the right reward mechanism for your business will save you time, effort and money in the long run – and help build that all important customer loyalty.