Loyalty Programs: an evolution in 4 movements

In Customer Engagement, Featured on App, Loyalty & CRM by Kevin Kelly

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Customer loyalty programs have been linking customer satisfaction and experience through rewards for decades. An analysis of these programs reflects how far they have come and what prospects their futures hold. Like any great 18th century symphony, customer loyalty builds to a very important fourth movement: a sonata that hopefully will be the end-game for businesses developing loyalty programs.

1. The allegro: Growing up punch-card. Was there anything better than getting that tenth punch on a VHS rental punch-card when you were a kid? Punch cards were a fun way to foster customer loyalty with mini-reward programs that kept customers coming back. From time to time, I still get punch cards and while they offer that same little thrill from my childhood, technology has moved on. I recommend businesses move onto more integrated reward systems: see 4.

2. The adagio: Great benefits with reward credit cards. Certain companies offer fantastic reward credit cards—my parents love the United, Amazon, and Nordstrom reward credit cards. Personally, after taking econ classes in 2009, I am terrified of my credit rating and on a strict debit diet. From friends and family, however, I have heard enticing stories of how reward credit cards have offered huge paybacks to loyal customers. If you can pay them off immediately, I would recommend them.

3. The scherzo: Basic rewards programs (punch card 2.0). These rewards programs aren't linked to other spending but often link your email and ‘mobile clubs' to a particular store. I've been victim from a few "would you like to save 15% today by signing up for our rewards program?" That said, these programs have occasionally led to great flash sales and daily deals that make them definitely worth it. Starbuck's My Starbucks Rewards program utilizes a similar system that attempts to gamify reward programs by asking users to gain stars in order to reach higher reward levels.

4. The sonata: Data personalization and mobile apps. Take a quick tour around LoyalBlocks to see what the future for loyalty programs holds. The company gives each merchant the ability to design their own loyalty program that runs on a platform available in the app store. Individual order histories can be accessed to tailor loyalty programs and preferences to individual ‘regulars' or offer suggestions to ‘newbies.' Moreover, the app automatically communicates with the ‘Base-Station' at the store to send you free stuff, discounts, and digitized punch-cards. The company has just passed the $9 million funding mark and continues to trailblaze the new technologies of customer loyalty. Most importantly, the app streamlines data collection by uniting Facebook, Yelp, foursquare and other platforms for an integrative and tailored customer experience. This is the future of loyalty programs that one day might even integrate ecommerce and brick and mortar loyalty experiences.

So lets highlight some important take-aways from this final movement: loyalty can be personalized, it can link digital and brick and mortar worlds, and it can use social media to enhance rewards in order to build a unique and individualized reward program.