Successful loyalty programs prompt desirable customer behaviors, keep people engaged, and generate a high ROI. Underperforming programs suffer from issues such as poor economics, lack of customer insights, and low engagement. Six techniques can help retool an underperforming program: 1) Draw an accurate profile of customers; 2) Know what those customers value; 3) Devise a compelling hook; 4) Let the games begin; 5) Build community; and 6) Consider an ecosystem with partners.
High-performing customer loyalty programs, while complicated to operate, have proven to be well worth the effort. Several successful airline loyalty programs have a higher valuation than the underlying airline. A recent Bain & Company survey of nearly 870 US consumers found that 63% of respondents said they make buying decisions based on loyalty programs they participate in. And since very small businesses resemble consumers in many aspects, loyalty programs have begun to spread in business-to-business markets, such as AB InBev’s program for small- and medium-sized food and beverage retailers.
