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The Importance of Investing In Customer Loyalty Programs

Written by: Eadaoin Dempsey, Associate Director of Design & Mandeep Chohan, Senior Product Manager, TribalScale

Our team has helped major media brands design their customer loyalty programs, all the way from concept to app creation. Here are some trends we’ve seen recently in the world of loyalty programs:

Cookie-less World

In 2021 Google announced that it would be banning third-party cookies starting in mid-2023 and launching “Privacy Sandbox” instead, driven by a push for data privacy. The path forward for advertisers is unclear, as you’ll no longer be able to track the behaviour of individual consumers on the web and currently there is no exact replacement for third-party data.

Brands need new strategies and technologies for segmenting, reaching consumers in personalized ways, and engaging with their audience. In a study by Boston Consulting Group, it was found that 80% of consumers are more likely to do business with a company that offers personalized experiences and 79% of customers say the experience provided is as important as the product being sold.

Leveraging Data

Customer loyalty programs are the answer to the cookie problem, providing a great opportunity for first-party data collection—the user interaction data collected with direct consent from your brand’s various apps, websites and devices. A YouGov poll showed that 88% of respondents were willing to share personal information in exchange for something of value such as discounts, free products or rewards.

The data leveraged from these programs (transactional, behavioural & product data) can help to further personalize and improve the customer experience. However, many brands would be surprised to realize that they are in fact experiencing data gaps, with only 21% of companies having an actual strategy in place to address this gap, as shown in a study. The same study also revealed that brands can stand to miss out on 1.5–2.9x revenue growth by not incorporating first party data into marketing efforts. This is huge!

Slow Economic Times

On top of this, there’s been a lot of chatter lately about a recession. Brands have been preparing for financially slow times ahead, now more than ever it is important to hold onto loyal customers. Loyalty programs have been known to boom during these times of economic downturn as customers have a shift in priorities, seeking ways to save money. Providing customers with opportunities to save money during these times is a great way to build a strong relationship.

How To Create a Loyalty Program That Stands Out: Gamification

Designing a loyalty program is easier said than done when the market is so saturated. The question becomes, how does your loyalty program stand out from the crowd with companies like McDonald’s, Starbucks and Air Miles out there? How do you create a loyalty program when you don’t offer a physical product? The answer is gamification.

In a study on gamification, 60% of consumers were more likely to buy from a brand if they enjoyed playing its game, rising to 86% for those that had experienced gamification before. If you can enhance your customer’s experience with your product without them even knowing that they are participating and enjoying themselves, you have already created brand loyalty. Gamification can also come in many forms: short term (spins and wins), medium term (collect and earn) and long-term (sweepstakes).

Our user research on a recent rewards project provided 3 key themes across all participants: keeping it fun, easy to integrate into busy day-to-day life, and rewards that offer fair value in return. This is where the challenge lies, balancing all 3 of these themes to maximize engagement and impact.

Other Best Practices

User Feedback — A great feedback system is important to understanding engagement. Hold user feedback sessions and listen to your customers. Is your rewards app intuitive, enjoyable and adding value to your customers’ lifestyle? Use this feedback to make strategic changes to your designs. You may even find other areas of the customer experience where gamification could be applied.

Social Media — Leveraging social media is necessary. Getting your promotion out there and offering free entries/rewards based on sharing is a game changer. Creating an online community and rewarding participation in it can help to spread the word.

Mobile—Offering a mobile app experience for consumers that are on-the-go so that it is something they can interact with easily in their daily lives.

If you would like to learn more about our loyalty program expertise or if you have any questions about how a loyalty program might fit into your organization, click here to chat with an expert on our team.

Resources

Eadaoin Dempsey, Associate Director of Design, and Mandeep Chohan, Senior Product Manager at TribalScale, have been working together on loyalty program projects. Their continuous research across various industries has provided significant insights on the benefits and challenges of creating, and implementing loyalty and rewards programs.

TribalScale is a global innovation firm that helps enterprises adapt and thrive in the digital era. We transform teams and processes, build best-in-class digital products, and create disruptive startups. Learn more about us on our website. Connect with us on Twitter, LinkedIn & Facebook!

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