By Habeeb Ur Rahman
A successful loyalty program goes much deeper than giving a discount or having great product. For companies, which excel in customer loyalty, it is all about knowing how to create an unremitting series of positive customer experiences that cultivate into long term customer engagement and profitability.
The rapid explosion of customer loyalty programs is a clear indication that retaining customers is the highest priority for a retailer. According to the research from International Institute of Analytics, in the USA, the enrollment in Loyalty membership programs has topped ~2.6 billion. But, the proliferation of loyalty programs and customer willingness to join them may be diluting their intended effect, where a typical household is having 21.9 loyalty program memberships, with an average person belonging to 7.4 unique loyalty programs (Maritz study, 2013). Over 84% of the retail organizations agree that their loyalty programs are “NOT” highly effective.
These findings on the missing links in the current loyalty program management across numerous companies call for the need, the need of having a full-fledged configurable loyalty framework. This framework should be such that, it will help plug these gaps in the current loyalty program management system. It shall be the ‘one of a kind change’ that would make the entire program “extremely effective” to demonstrate a greater commitment to the program and engage more deeply with customers’ needs and preferences.
The loyalty framework model will be an add-on integrator to an existing loyalty management application so that companies retain their existing infrastructure and do not have to reinvent the wheel. It will help companies Define, Listen, Measure and Adapt a better approach to enhance their loyalty program.
Characteristics of the framework:
The rapid explosion of customer loyalty programs is a clear indication that retaining customers is the highest priority for a retailer. According to the research from International Institute of Analytics, in the USA, the enrollment in Loyalty membership programs has topped ~2.6 billion. But, the proliferation of loyalty programs and customer willingness to join them may be diluting their intended effect, where a typical household is having 21.9 loyalty program memberships, with an average person belonging to 7.4 unique loyalty programs (Maritz study, 2013). Over 84% of the retail organizations agree that their loyalty programs are “NOT” highly effective.
Key challenges in building a successful Loyalty Program:
- Measuring effectiveness of the Loyalty Program: Loyalty programs call for large yearly investments. However, when it comes to determining the financial impact, most of the retailers do not have a mechanism to discover the effectiveness of the program as, increased spend on loyalty programs do not necessarily translate into proportional growth rate.
- Offering rewards that customers value: One of the major reasons that loyalty programs are failing today is because customers do not see any perceived benefits from the programs. Companies are disengaged in understanding customer needs & preferences and failing to tailor these in their loyalty programs.
- Cross- platform integration across all channels of customer contact points: The advent of Omni-Channel retailing has empowered a customer to purchase goods from diverse channels. This requires to be coupled with the different ways and means customers interact on social media, and other digital platforms. It becomes even more difficult for companies to coordinate the loyalty programs across all the channels and provide a seamless consumer experience.
- Uniqueness of the program: Majority of the loyalty programs are focused on member points or rewards and the highest benefit given to the customers is either exclusive sales or discounts. In comparison with the loyalty programs, there are no distinct differentiators that offer a distinct advantage over other programs.
These findings on the missing links in the current loyalty program management across numerous companies call for the need, the need of having a full-fledged configurable loyalty framework. This framework should be such that, it will help plug these gaps in the current loyalty program management system. It shall be the ‘one of a kind change’ that would make the entire program “extremely effective” to demonstrate a greater commitment to the program and engage more deeply with customers’ needs and preferences.
The loyalty framework model will be an add-on integrator to an existing loyalty management application so that companies retain their existing infrastructure and do not have to reinvent the wheel. It will help companies Define, Listen, Measure and Adapt a better approach to enhance their loyalty program.
Characteristics of the framework:
- Configurable Rule engine: A work flow based architecture where events /rules can be customized /defined, and transaction & actions can be measured. This will help in defining and measuring the effectiveness of the program and to check for any gaps or change the strategy being followed. It allows companies to tweak the program mid-way with the help of configuration user interface.
- Adaptors for data capture: An interface architecture to collect data from all the customer contact points, i.e. Store POS, e & m commerce, CRM systems, social media and other digital platforms. This enables the retailers to listen to customers’ requirements and preferences, which will help build the differentiators of their loyalty program to bring out the uniqueness in their programs.
- Analytics engine: It facilitates retailers to capture and track customers’ buying behavior to provide a comprehensive insight on the campaign performance, develop one-to-one relationship with loyal customers through unique and customized offers.
- Business intelligence dashboard: To analyze and predict customer behavior, and to derive actionable insights on the loyalty program by using customer experience analysis, market basket analysis, social media analytics, text analytics and sentiment analytics are quintessential.
- Configuration User Interface: Based on the insights received from the analytics, trends and dashboard performance, companies can configure new events, define the criteria and assign actions at any given point of the campaign cycle to make the entire loyalty program robust and flexible.















