Continuing from Part 1, this segment explores some of the delivery mechanisms of loyalty/reward program models as well as key metrics to track their effectiveness and success
Loyalty & reward delivery mechanisms
Aside from the back-end systems to support the loyalty/reward platform, it is equally imperative for businesses to implement an extremely friendly and intuitive front-end User Interface (UI) and consumer experience (CX) initiatives
Dependent on the business type and products/services offered; there are 4 key delivery mechanisms for loyalty/reward programs –
- Simple Paper Card
- Traditional Plastic Card
- Smart/Keyring Card
- Mobile First
Furthermore, businesses could pair their loyalty/reward program initiatives with suitable m-Payment & m-Channel platforms that increase the potential to better understand potential shoppers & current customers through data science
1. Simple Paper Card
Oldie but a goodie; where basic paper card (with graphics & advertising) allows for ‘hole punches’ to record reward/transaction
Challenges: Traditional paper card formats could easily be misplaced, stolen, transferable (read: no unique ownership), mostly not eco-friendly and/or potentially end up in the washing machine
2. Traditional Plastic Card
‘Old school’ credit card sized reward cards that sport either a barcode or mag-stripe
Modern versions may have a chip or RFID built in to better improve security as well as accurately understand the unique member’s shopping behavior
Challenges: Given that customers may have multiple loyalty/reward programs, the key user experience challenges could vary from “do I have to carry yet another plastic card” through to “I can’t find that loyalty card” at the POS
3. Smart/Keyring Card
Slightly more compact format than traditional credit card size with the added benefit of placing with everyday house & car keys
Similar to it’s bigger brethren keyring cards could also sport barcode, magstripe, chip or RFID
Challenge: Though easier than searching for a plastic card, customers may still be left searching for their keys at the POS
4. Mobile First
Mobile first formats (smartphones, watches, etc.) is where businesses invest in a scalable digital platform (m-wallets, QR codes, etc.) for loyalty/reward program delivery to end users
These digital loyalty/reward could further be implemented with any m-payment platform that could make make the reward transaction more intuitive & straightforward for shoppers
The key benefit of a mobile first approach is the ability for businesses to better understand their shoppers/customer’s purchase behavior (read: data)
Businesses (with user permission) could also have the option to integrate personalized discounts, rewards and services thereby enhancing the overall customer satisfaction & engagement
Measuring Program Effectiveness
As with any strategic initiative, reward/loyalty programs too require set of KPIs that measure their long-term effectiveness
The measure of success for any reward/loyalty program should ideally be closely aligned with customer-centric metrics; namely program satisfaction, promoter scores & retention/churn rates
Some common metrics used in the industry are –
Retention Rate
Typically an indication of how long customers stay ‘actively loyal’ to the business
When done right, a loyalty/rewards program should help grow/improve customer retention scores for the business
Churn
Typically described as the rate at which customers “leaves a business” for its competitors
Conversely negative churn measures the propensity of current customers to cross-purchase, upgrade or commit to a longer term
Net/Promoter Scores
Typically a representation of customer satisfaction metric that measures (usually on a scale of 1-10) customer’s advocacy of the business’s products & services to their friends & family
In this day and age of social media, it is equally imperative for businesses to measure consumer/customer’s promoter scores (metric); particularly due to risks associated with managing negative brand experience (via multiple social media channels) – costs and brand name
So…
Whether off the shelf or custom designed; loyalty programs still remain one of the most effective acquisition & retention tools (if done right) broader retail, QSR and service industries have at their disposal
Following segments will aim to explore key attributes and monetization models of select loyalty/reward programs.
Stay tuned!
