Did you know that the average loyalty program gives 3 to 5 percent of revenues back to the customer? It’s true?and most loyalty programs are based on points and rewards based on how much money the consumer spends. That is all well and good?and point based loyalty programs work well (for both consumer and brand) if the average price of the products is high; however, the reality for budget or low cost brands is that it is not advantageous to participate in these typical structured programs. With that said, many budget brands tend to stay away from loyalty initiatives all together, which is a shame as these companies are missing out on an opportunity to reach their customer base and drive loyalty.
It is possible, however, for budget brands to build successful loyalty programs – that are advantageous to both company and consumer. It is also possible for companies with high value products to step outside of the structured loyalty programs and really stand out from its competitors. In both cases, companies need to learn more about their customers and implement rewards that have emotional appeal. To accomplish this, Matthew Rhoden, a partner at Peppers & Rogers Group, suggests taking a three-pronged approach and looking beyond points in a recent article titled: “Your Wallet Does Not Dictate Your Loyalty. So Why Does It Dictate Your Loyalty Program?“ He makes several recommendations such as using experiential rewards, rewarding behaviors beyond purchases and using loyalty data as customer insight.
There are also some great bits of information from Martha Rogers, Ph.D., in this article which we recommend you read in its entirety to find out how to implement a margin positive loyalty program.
