Best Practices In Loyalty Marketing – Kelly Hlavinka

It is clear around the world and in every industry. Loyalty program members continue to shop and buy more in return for recognition and rewards.  Successful loyalty strategies must assume a more comprehensive role in the overall marketing plan—one that seeks to identify and leverage the current relationships between a company and its customers, then extends that equity to achieve a competitive advantage based upon that relationship.

The following 10 tips outline what it takes to establish loyal customer relationships:

1. Understand Your Customer’s Value

Loyalty is about more than purchase behavior. Loyalty is really about a consumer’s engagement with your brand and service. To measure engagement, your loyalty system needs to track and score your customer’s overall activity and involvement with your brand’s offering. Effectively monitoring customer engagement means evaluating the relationship as a whole. A tracking system set up to pay-out solely when a designated purchasing threshold is met and then restarts is a system that overlooks valuable customer information. 

2. Customer Tiering

Never forget…all customers are not created equal.  Referred to as “tiering” your program, varied combinations of recognition and reward are a necessity for maximizing the return on your loyalty investment.

Establish criteria that define good, better, and best customers. Then, tell your customers what being good, better, and best means and reward the specific behaviors you want replicated.

With a tiered program, you can allocate marketing dollars to the customers that have profitable behavior patterns.  Active customers spending more time and more money deserve to feel more important, because to you, they are more important.

3. Offer Compelling Hard Benefits

A compelling hard benefit is a tangible reward, irresistible in perceived value, and available to the member for free. It’s an economic award that lets the customer know they get exceptional value each time they shop at your store. Avoid dollar-denominated benefits or straight discounts. Discounts are not rewards.  Discounts are easy to copy, lack memorable impact, and only increase the customer’s focus on price.

A compelling hard benefit engages the imagination, and carries high-perceived value in the eyes of the consumer.  For instance, golf clubs are a nice reward, but imagine a customer’s gratification when those clubs are bundled with the opportunity to attend a golf clinic at a reputable golf course. Craft your hard benefits to be experiential in nature so each and every best customer views your reward offering as unforgettable and highly valued.

4. Develop Defining Soft Benefits

Soft benefits are intangible. They focus on recognition, appealing to customers’ emotions. Soft benefits are essential in a loyalty program so members feel “important.” Soft benefits help drive loyalty because they take aim at the emotional, more intimate side of the customer relationship. They add depth and uniqueness to a loyalty program and make it hard to duplicate.

Soft benefits are critically important to your most valuable customers, whose loyalty demands legitimate evidence of their special status. Special status means special treatment, special deals, special access, special events—whatever it takes to reinforce the sense of importance of top-tier, high-value customers. Defining soft benefits set apart your relationship with your best customers, offering experiences unique to your brand and unavailable to non-members.

5. Multi-Tender Programs Identify “Invisible” Customers

The goal of your loyalty program should be to identify your best customers, regardless of their tender preferences, and to create a value proposition that encourages repeat visits.  If you have a private label credit card (PLCC), you can position it at the apex of your loyalty structure as the “gold standard” to which best customers can aspire, but you must also have mechanisms in place to capture transactions paid by cash or check.

6. Build Strategic Partnerships

Loyalty programs evolve by means of partnerships. The right program partners can provide your program diversity and opportunity.  They enhance the value proposition of the program as well as reinforce the brand association. Partnerships create opportunities for additional earnings or reward offerings.  Establishing strategic alliances may even provide a source of acquisition, bringing new customers to your brand.

7. Integrate Your Physical And Virtual Worlds

Your customers want seamless interaction with your loyalty program in your store, in your catalog, and on the Web. Multiple distribution channels set the stage for a strong and flexible program. No matter which channel your customers choose to engage in your program, each transaction needs to be a user-friendly, simple-to- understand experience.

8. Real-Time Recognition And Rewards

It’s the “Holy Grail” of loyalty: the ability to deliver points and reward redemptions in real-time, with no monthly statements, receipts, or coupon clipping. The closer you can align recognition and reward to the desired behavior, the better your results will be.

9. Reflect The Value Of Your Brand.

Your loyalty program can help articulate the qualities of the brand to your customers. The more relevant the brand becomes to each customer, the less focus they will have on price and sporadic promotions.

10. Initiate a Dialogue

Establishing a dialogue with your best customers is a key element in your loyalty-marketing program. This direct line of communication with members tells you what you’re doing right and wrong. It makes customers feel important, more loyal, and more interested.

By having an ongoing conversation with customers, you can build a relationship. If you build a relationship, you can gain the customer’s trust. And if you gain trust, you can increase retention and generate additional sales.

Kelly Hlavinka is Partner at COLLOQUY. She can be reached at

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