Do you only reward loyalty with financial rewards? It’s time to change!
The most advanced brands and retailers are adopting innovative loyalty programs based on a combination of products, services and experiences. The goal is to offer not only economic benefits to their customers, but also emotional and social benefits, where the word “ecosystem” takes a key role.
The reason for this shift is that the wants and needs of today’s consumers have evolved, exposing the limitations of traditional loyalty programs. In a world characterized by an increasingly demanding consumer, with access to more information and more digital experiences, traditional loyalty programs, based on financial rewards, are seen as undifferentiated and deficient.
As the consulting firm McKinsey points out, within this transformation, brands and retailers typically transit through three phases:
- A first, in which they move from a model based solely on financial rewards to one that also includes experiential and content benefits;
- A second phase, in which they move from siloed programs to programs that combine benefits from their different offerings (an example is Amazon Prime, which includes access to different Amazon offerings, such as Prime Video, Prime Music or Prime Reading);
- In the third phase, which represents the transition to the most mature stage, loyalty programs move out of the company itself, to be based on benefits offered in collaboration with an ecosystem of partners.
The success of this last type of programs based on partner ecosystems is built on several key aspects such as:
- Simplifying the conditions for program entry as much as possible;
- Having a single and integrated information of the customer’s activity through the different platforms of the ecosystem partners, which means being able to share data between them;
- Define different levels adapted to the spending level of different buyer profiles, offering the option of subscription for access to more differentiated or exclusive benefits, both in terms of prices and products, services and events;
- Use the loyalty program to go beyond retention, and turn it into a tool for attracting new customers, encouraging network promotion by its members and maintaining an active community.
Today, many brands have evolved their loyalty programs towards this type of model.
Is your loyalty program still based exclusively on financial rewards? Be careful, you may not know it, but you are losing money and customers.