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5 tips for encouraging customer loyalty through any economy

Todd Budin | Senior Product Leader, FIS

June 29, 2020

Loyalty programs are a tried and true way to build customer relationships and encourage spending, but they need to change with the times. With an uncertain economic outlook and more consumers at home and online due to the pandemic, it’s a good idea to revisit your current loyalty program or implement a new one.

Businesses large and small face similar questions when it comes to loyalty programs. How can we make it easy for our customers? Do customers have to sign up manually or can technology track their purchases? How much should we invest in a program or technology implementation?

A loyalty program is one key way to tell a story about your brand. Keep that in mind as we explore five things you can do to make sure your loyalty program is keeping up with changing consumer expectations.

1. Make benefits clear

Rewards that are clear, distinct and immediate make a loyalty program more attractive to customers. You see this in “buy five, get one free” offers. Instant gratification in the form of immediate rewards are motivating to consumers, especially in difficult economic times.

If you decide to offer an instant reward with your loyalty program, remember that it requires a well-thought-out consumer journey as well as the technology to track. So, it’s important to think about the customer journey overall when considering a loyalty program.

Since the end benefit is what motivates a customer to join a loyalty program in the first place, it’s also important to keep the process simple for earning rewards. If it’s confusing or complicated – many point-based programs fall into this category – consumers are less likely to sign up.

Tracking should fall entirely to the merchant but be visible to the consumer, so they always know where they are on their way to their next reward. Loyalty programs that make benefits clear and simple to earn tend to have higher engagement.

Key takeaway: Use downturns in the economy to think about how you can further build your brand message and clearly communicate the value of shopping with you.

2. Reduce friction at checkout

Many instore loyalty programs are POS-based, allowing a customer to sign up with just their phone number. Some offer a debit or credit card specific to that business. Others use traditional paper punch cards. Whatever the option, the program must balance delays at checkout with the ongoing benefits.

This is where the idea of a “calculated benefit” comes in. Consumers automatically weigh the time it takes to join a loyalty program against the rewards they could earn. If it’s easy to join, a consumer is likely to take the time even if the rewards aren’t great. But if it’s a hassle, the rewards must be pretty enticing to get the customer to follow through.

Key takeaway: Make the benefits of your loyalty program greater than the work required to sign up.

3. Be authentic to the brand story

Your loyalty program is the perfect vehicle to communicate with customers. It’s one of the few ways you can really develop a relationship with the consumer. Building authenticity not only attracts customers initially but also helps retain them in the long run.

Simply letting people know where you are coming from and being honest about the challenges you face builds more loyalty to your brand and helps build a brand persona that consumers can relate to. Never underestimate the value of empathy.

Key takeaway: Let your customers get to know more about your company and what you’re about. Go deeper than the goods or services you provide.

4. Get creative

Change drives ingenuity and we’ve seen a lot of creative promotions in recent months. There’s the taco restaurant that offered a roll of toilet paper with every family pack dinner order, and the pizza place that donated proceeds from one night’s orders to employees. These types of promotions leave a lasting impression and attract loyal customers.

There’s also the notion of surprise and delight in which ties into the idea that it’s more fulfilling to receive something when you’re not expecting it. For example, a superstore recently sent my wife a giant cookie cake signed by all the store’s managers for a milestone she didn’t even know she had achieved – her 50th grocery delivery.

Key takeaway: Think outside the box with your loyalty rewards and don’t be afraid to pivot if you’re not seeing the engagement you want.

5. Keep it simple

Large businesses are likely weighing the technological implementation and tracking needed across all channels. It’s important to have a program that easily crosses channels and reduces friction at checkout no matter where your customer is shopping.

A major obstacle to implementing a loyalty program for small businesses is that the vast array of choices can be overwhelming. There are a couple things you can do. You can ask around to find out what other similar businesses are using. You can also seek recommendations from professional organizations in your industry.

If purchasing a program vs building one in house, a side-by-side comparison of all your options and their bells and whistles. A lot of programs extend beyond loyalty into other facets of shopping and marketing – and not every business needs every feature. Comparing side-by-side helps you determine what you need and what makes sense for your business. So-called “set it and forget it” loyalty programs are especially well suited for smaller businesses.

Key takeaway: Choose only the loyalty features you will use.

A loyalty program is a very useful tool for customer conversion, but even more, it’s an effective way to build a relationship that turns a loyal shopper into an advocate for your brand. Amidst all the change we’re experiencing in our day to day lives, it’s nice to be able to count on something consistent. For your customers, that means your brand. Loyalty is a big piece of your brand, so be sure to tap into the benefits, communicate with consumers and give it the attention it deserves.