We all know customer loyalty programs can increase retention, frequency, spend, and brand advocacy. But there are a number of other business goals engagement programs can help achieve. For example, a program can reduce costs, improve operations, drive channel choice, and influence use of payment platform.
Many corporate stakeholders have operational, logistical, or financial needs for which a loyalty program may not appear the obvious answer – but just might be the best answer. In fact, a program can often effectively drive operational improvements without adding cost, by offsetting investment with ancillary revenue streams.
Let’s look at a few examples.
A common feature of many loyalty strategies is a private label or co-branded credit card. It’s true such programs may not always drive measurable incremental business. But when a program provides extra benefits, rewards, or savings to customers who use the card, the consumer gets more for their money, and the brand can enjoy a significant stream of revenue from their partner bank.
Many businesses recognize savings and deliver an enhanced customer experience by incentivizing use of the brand’s mobile app. A powerful way to drive customers to your desired channel is to deliver enhanced loyalty benefits through the app – or, as many in the QSR field have done, make program participation available only through the app.
Sometimes operational and technological improvements can streamline operations and improve margins while giving customers a new level of service and empowerment. The history of loyalty programs provides a paradigm-shifting example. When Hertz introduced their original #1 Club Gold program, it was the first in the industry to allow members to go straight to their car without stopping at a counter. This was exactly what customers wanted – and it resulted in substantial savings in staffing costs, while the improved CX also drove fierce loyalty.
And of course, engagement programs are still one of the most effective ways to collect vital customer data with transparency and permission. Properly understood and applied to marketing, pricing, communications, product mix, location and service offering, data acquisition remains perhaps the single most valuable aspect of a well designed program.
When we look at loyalty programs as helping solve the “obvious” challenges, we also need to take a broad and creative look at the many other business goals a program can achieve. Your thoughts?