8 elements of a loyalty program your customers will love (and your competition hate)

Posted on 19/07/2019 by Leszek Olszański

Omnichannel is not a buzzword, yet it is far from being a clear term. Moreover, it is the customers who are omnichannel and companies are merely racing to keep up. So if commerce is  omnichannel, can loyalty programs avoid being omnichannel too?

Connected generation
Generation Z (people born in 1995 and after) is connected with the internet for more than 10 hours a day and 95% of them own a smartphone. Therefore, omnichannel is natural for them and only the older generations (and many corporate managers among them) consider it something new and exciting. According to the yearly report issued by marketing automation company Omnisend, an omnichannel experience delivers up to a 250% higher purchase frequency and a 90% increase in customer retention rates. It is a consequence of catering to the needs of the customer, not dazzling them.

So what should an omnichannel program look like?

  1. Well, first of all it should be omnichannel. That means it should enable multiple ways for customers to take part in the loyalty scheme, whilst delivering a consistent experience and look’n’feel. The contemporary meaning of omnichannel includes at least five channels, namely: mobile, web, on premises, social and offline (tv ads, leaflets, outdoor etc). This means bonuses earned by ordering food delivery should be available to be used whilst dining-in and vice versa. Special offers promoted by outdoor campaigns or social media should be available in the mobile app (and be presented in a prominent way so they can be easily found by those who are searching for them). Messages sent in an e-mail campaign should be personalized accordingly to the particular customers purchase log etc.
  2. It should be customizable. No business is the same - with different offers, values, philosophy and strategy, companies face numerous unique challenges. That’s why a loyalty program needs to be fully customizable, with no “one size fits all” approach. When you offer similar bonuses for similar activities to that of  your competitors, it is difficult for customers to keep focused on your offer and, therefore, to remain loyal. You should be creative, and provide them with a unique selling point . We at 3e Software House usually equip our loyalty apps with a script-building interface, that allows marketing staffers (after a brief training) to build custom bonus schemes, based on all available customer data such as age, family status, frequency of purchases, dish preferences etc. Try to offer them bonus points not only for their purchases, but also for fitness routines, for social media shares, for using order ahead functions  during rush hours etc. With a script-building tool, the loyalty system is easily adjusts to new conditions, with no need to hire developers when a new promotional idea emerges.
  3. Good prizes - The customer needs motivation to use a loyalty program. The key motivation is a good prize - research shows that 57% of customers sign up to a program to save money. Discounts, cashback and other special offers will support the brand and enhance the experience regardless of the channel. That’s where a company can experiment - a great pizza party after collecting a large  number of points? Why not?  Free garlic bread added to all meals? Just test it!
  4. Money is not everything - There are numerous non-transactional activities that support brands. Every brand needs brand ambassadors, so any mentions in social media, adding a hashtag on Instagram or driving traffic by writing a blog post should be praised. In the loyalty programs we produce, it is possible to determine how often the user visits the webpage or a restaurant and in turn be offered additional benefits for -  unsurprisingly - loyalty. The evergreens of loyalty programs like small presents for birthdays or special days like Black Friday are also a nice addition. A source of  inspiration can come from the Medicover Benefit system, where the company - whose core business is corporate medical insurance - delivered an offer composed of complementary services - corporate benefit packets - both augmenting the basic product and providing excellent customer satisfaction.
  5. And when I write money is NOT everything, I really mean that - Outstanding loyalty programs are built upon the additional advantages delivered. An example comes from the Starbucks Coffee app, that combines bargain hunting with the loyalty program and a tool allowing clients to pay by phone, even if they forgot their wallets . Also, the app contains a tool to locate the nearest coffee shop and to receive push notifications allowing users to quickly collect their bonus points and win prizes.
  6. Transparent and easy to understand - For some loyalty programs, there are rules so complicated they need to be shown on boards with schemes and arrows pointing toward the next point. It neither builds trust nor engagement. So the key is to deliver transparent and easily comprehensible rules. All the complicated details need to be on the company's side. Any bonus or bargain can be counted in any way, be that a percentage or a hard-coded amount of money, the key is to show the customer that it is easy, transparent and understandable. And - as a best practice - provide customers their transaction history, to provide them the option to check any time they want their transaction history and how they won (or missed) their bonuses.
  7. Well-designed - Customers look for a good user experience and they usually find it - on websites, in mobile applications, on the screens of self-service kiosks etc. They are accustomed to the relatively high level of UX of the big multinational brands such as Google, Facebook Netflix or Spotify. Such companies, with their big budgets and scientifically optimised UX are setting the standard for the whole market.  When delivering an omnichannel loyalty program a company cannot look for savings in omitting UX and UI design. A good example of this came from KFC web ordering page optimization that delivered 18% conversion rate boost and an 8% performance boost. Similar metrics are seen in loyalty program performance.
  8. Measurable - The program needs to be designed with clear KPIs in mind. Measurability and a data-driven mindset are two sides of the same coin. The first task of the program is to support the business, and drive sales.

The basics of a good loyalty program is tight integration with existing tech solutions. This can be even more challenging than delivering the program itself. Modern HoReCa business's needs to manage the tech stack in an agile way, connecting the legacy tech with the newest technologies. Costa Coffee faced such a challenge. They are working on Oracle Micros RES POS. When they developed a new loyalty application they faced the substantial problem of integrating it with their older genaration core system. Without that integration the newly developed app wouldn’t work on their cash desks. Our team designed a dedicated Oracle Micros plugin to make the two applications talk to each other and plug the coffee shops into the loyalty scheme. Additionally, the final version was delivered with an additional module updating the loyalty system with menu data from their legacy POS.
That’s why restaurants experience omnichannel as a tight integration. There are two ways: First one means inter-connecting the technology and building end-to-end patchwork solutions like that in Costa Coffee. The other one means abandoning the legacy solution and replacing it with the brand new, cloud based POS system, with built-in omnichannel features. Which one is good for you?