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Loyalty programs work, but marketers face challenges Published-May 9, 2016
Are you a brand loyal customer? Many of us are. We shop at the same stores, and we always buy specific brands if they are available.

For some of us, it takes a lot to shake our faith in a particular product. We think our laundry detergent works better. Our car is the best in class, despite claims competitors make. We stay at the same brand name hotel, and we prefer a particular airline.

One of my first experiences with a loyalty program was American Airlines. I still remember the frequent flyer number I was issued when the program started in 1981.

The concept was novel - getting perks for doing what you would probably do anyway. It changed my behavior, just as the program designer wanted. I asked my travel agent to book me on American if at all possible.

I wanted those miles. I could see myself flying first class on vacation, getting upgrades on business trips and being recognized as a valued customer. Those were heady experiences for a fledgling advertising account executive.
 
Today, loyalty programs are table stakes and commonplace, down to supermarkets, drugstores and oil change businesses. Customer relationship management systems (CRMs) track your purchase behavior, serve up offers and ping you when you are not purchasing up to expectations.

Bond Brand Loyalty, formerly Maritz Loyalty Marketing, is a North American leader in providing customer loyalty solutions for brands. It reports regularly on a variety of perspectives on loyalty programs of all types.

Here are some of the metrics Bond Brand Loyalty tracks and recent consumer rankings of those metrics:
  • The programs are worth the effort — 86 percent
  • They make me more likely to continue doing business with a certain company —  83 percent
  • They are part of my relationship with a brand —  76 percent
  • I modify when and where purchases are made in order to maximize benefits — 76 percent
  • I modify what brands are purchased to maximize benefits — 64 percent
 
All of these numbers continue to grow in terms of their importance to consumers.

The research also ranks both the functional and experience drivers that consumers deem important in brand loyalty programs.

The top functional elements that create satisfaction include:
  • Appeal of the rewards offered
  • Ease of redemption
  • Amount of reward accumulated per $1 spent
  • Ability to reach rewards in a timely manner
  • Number of ways benefits can be earned
 
The top experience drivers include:
  • Worth the effort of participation
  • Meeting my needs
  • Enjoyable
  • Simple
  • Easy to understand
 
Because loyalty programs have become omnipresent, several factors are slowing their effectiveness.

While program enrolments are increasing, consumer participation numbers are flat. Only half of consumers will increase spending after joining a program. Therefore, the impact of rewards is not a consistent sales driver, and 44 percent of people surveyed see little difference between competitors’ offerings. That encourages brand switching.

When consumers were asked what causes brand satisfaction, loyalty rewards programs tied for fourth spot. The top three factors are quality, whether the brand meets the users’ needs and consistency.

My takeaway: You must figure out how to acknowledge and reward customer loyalty. In some cases, the humble punch card is just as effective as the yard-long CVS receipt.

David Behan founded Bohan Advertising in 1990. He has worked in marketing and advertising since earning a degree at the University of Tennessee-Knoxville in 1970.
 
 
Sourced By: tennessean.com

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