Good vs Bad Loyalty Programs

“Do you have a loyalty card with us?”

More often than not, this is one of the first questions a customer will be asked when they reach the register or online checkout. For some, whether or not they are a member is of zero interest to them, but for others, their membership is top of mind. Why? Because loyalty matters. It matters because 88% of consumers want to engage with brands that are setting new standards in meeting their expectations

There’s more than one way to incite customer loyalty, but one of the most popular methods brands turn to is the use of customer loyalty/rewards programs. Customer loyalty programs are a way of proving to your customer that you understand their needs and value their contribution to your company.

These programs are absolutely everywhere, yet many brands are still missing the mark. This is because the majority become fixated on the conversion of points into monetary rewards. While monetary rewards are great, they aren’t everything. An emotional connection needs to be established by providing relevant incentives that show the customer they are appreciated and understood.

So which players stand out in the customer loyalty playing field, and who is slipping behind?

 

THE GOOD

1. MECCA Beauty Loop

MECCA know what their customer wants and knows how to give it to them. The reason their rewards program stands out is because it provides what many are still lacking- an experience. Aside from discounts, MECCA Beauty Loop also offers new samples to try and access to exciting in-store experiences. Members receive the highly anticipated ‘Beauty Loop Box’ sent four times a year filled with new products for customers to discover. This box of makeup joy is curated depending on whether the customer is a Level 1, 2 or 3 member, which is determined by how much they spend per year. Beauty Loop Level 2 and 3 members are entitled to complimentary makeup tutorials and complimentary makeup applications, and Level 3 members have insider access to shop new and limited-edition products online before the official launch date. Regardless of the level, customers can still receive something useful and relevant to their shopping habits. Whether you’re a Level 1 or Level 3, customers can still see the value of their membership on a frequent basis.

 

2. Amazon Prime

Amazon Prime is a little bit different in that customers are required to make an upfront payment for this service, however Prime makes sure that customers get their bang for their buck. Examples of what the Prime experience entrails include free same-day delivery and one-day shipping, access to Prime Video, Prime Music, exclusive savings, and free audio books. So what makes customers decide to pay this annual fee? If someone is a frequent shopper on Amazon, they know that they can acquire enough value in return for their paid membership. Similar to MECCA, customers know that the membership is benefiting them because of the reward frequency. Prime members don’t have to wait around for their birthday or a special occasion for a promotion or offer- they have access to a whole range of rewards every single day.

3. TOMS ‘One for One’

The loyalty that TOMS promotes operates a little bit differently to the other brands mentioned. It works because it offers a very unique incentive for customers. Customers know that for every product they purchase, TOMS will help a person in need. This idea may seem very simple, but brands often underestimate the customer desire to create social value and change. When a customer can see that their purchase is making a direct impact, they don’t need to question where they ‘fit’ in relation to the company. They know that the brand needs them to continue with this project. This exchange of value is extremely powerful, and it is what drives to customers to repeat purchase with TOMS. What TOMS emphasises is that points and monetary rewards aren’t always the safe bet when it comes to securing customer loyalty.

 

THE NOT SO GOOD

1. FlyBuys

FlyBuys has been around since what feels like the days of the Dinosaur Age. Ok so maybe that’s a far-fetched exaggeration, but what we’re getting at is that FlyBuys has been around for quite some time now. Although its name is well known, its value for money is not. The FlyBuys points scheme takes an extremely long time to accumulate, which in the end leaves customers waiting for years to finally exchange their points for an underwhelming product of low value and relevance. The problem here is that customers aren’t receiving value often enough to feel like their purchases matter.

Ultimately, like other loyalty cards, it is collecting information on the customer and their shopping habits, however the exchange here isn’t equal. Whilst FlyBuys continues to gain and store data, customers are left tapping away with no real awareness of what their points are actually working towards. The result leaves customers feeling ripped off and underappreciated.   

Given the large number of partners Flybuys has and their Bonus Points docket deals/coupons, one would assume that points would accumulate relatively quickly. Yet the unfortunate case for many customers is that this takes too long, meaning they are unable to regularly convert their points into discounts. Perhaps if customers saw this conversion happen automatically and regularly, it would make them feel like the program is actually doing something productive.

 

WHAT DOES THIS TELL US?

Customer loyalty programs are only one part of the long-term loyalty strategy. These programs need to be used as a part of the customer experience, rather than as band-aid solutions to cover up customer pain points. Whilst lots of brands claim to have a loyalty program, often these programs more like marketing in disguise. What needs to be remembered is that the ultimate aim of customer loyalty programs is to keep customers coming back for more, and these programs need to ensure that customers aren’t left feeling confused or unsure about why they do.