How Brands Can Revamp Loyalty Programs to Keep Customers Coming Back

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In the age of the consumer, brands need to retain customers more than ever before.

Consumers are empowered with all the information they could ever need about products at their fingertips. They can easily use their mobile devices to find the best deals anywhere, anytime.

That’s why it’s more critical than ever to differentiate. One of the most powerful ways retailers can do that is through their loyalty programs, and is why many retailers are rethinking loyalty.

For example, clothing retailer J.Crew recently revamped its rewards program, opening it up to all shoppers, regardless of how they pay.

Here are some ways that retailers can use loyalty programs to offer a great and unique experience to their customers.

Add a Paid Loyalty Tier

One way that brands can energize their loyalty programs is by adding a premium, or paid, tier to a free, or traditional, program.

As more brands make the leap into premium loyalty programs, many might offer both a free and paid option and allow customers to upgrade. Paid loyalty programs are a great way to provide elevated experiences to customers who have shown the most interest in your brand.

Loyalty is based on relationships, and truly listening to your customers is the path toward brand enlightenment.

Offering a premium loyalty tier can transform a static, free loyalty offering into an inviting and engaging program. With a free loyalty program, the barrier to entry is low so it’s easier to acquire a higher volume of members.

Free programs, however, tend to be structured on an earn-and-burn model, which means that members need to achieve certain spend levels for the rewards to be meaningful. For example, a $5 reward after you spend $100 is typical in free programs. But a premium tier can allow consumers to buy-in via an annual membership fee and receive elevated benefits immediately. Those benefits are also accessible 24/7.

Focus on Experiential Benefits

Experiential marketing is and will be a major trend moving forward.

Customer experience is key right now and brands are seeking new ways to stay top of mind and ahead of the competition. Customers should leave an experiential marketing event feeling more valued and more emotionally invested in your brand.

While consumers still appreciate transactional benefits like discounts, customer loyalty success, now and in the future, will be largely shaped by experiential benefits. It has become more about the emotional attachment to a brand, based on those experiences. Interactivity and real-time engagement will play a role, but also the ability to leverage technologies such as artificial intelligence to help recognize and reward customers for their loyalty and deliver unforgettable experiences.

Consider events or services like Sephora’s in-store makeovers. Another perk that has value in a premium tier are member-only exclusives. These can be products not broadly available, or early access to sales or even curated content.

More and more brands are investing in experiential marketing. Millennials and young generations value experiences, sometimes even more than discounts, so it’s important for brands to offer meaningful, relevant activities and rewards.

Experiential marketing and emotional attachments trigger deeper brand loyalty and bridge the gap between transactional and actual loyalty.

Make it Personal

If you're targeting a demographic, you can access consumer databases or studies to get a macro view of your customer to get a sense of who they are and what they care about. Layering in qualitative interviews with your actual customers will give you a much more complete picture of their world and will help you uncover how your brand fits into it.

Design your loyalty program around your customers. This means talking to them often.

Traditional programs today don't necessarily make customers feel more loyal because they’re largely the same. They just train consumers to find the best discounts. There’s nothing personal or memorable about that.

Most customers today are willing to give up some privacy if it means more personalization and a better experience.

While many retailers believe they're ahead of the curve when it comes to personalization, it amounts to something more than a "we noticed you bought this and thought you might also be interested in this" strategy.

Today’s prototypical consumer wants to be acknowledged and, more importantly, understood. Feeling like a brand truly knows them is what forms strong emotional connections and leads to a larger share of wallet.

Brand Alignment is Crucial

Customer loyalty cannot be designed or implemented in a silo. It must be a companywide mission and responsibility, and it all starts with truly listening to your customers.

Loyalty programs should support a brand’s value proposition and its customer experience, not shake it up or create a new experience.

If you're seeing participation in your loyalty program wane or if metrics are starting to flatten out, go to your customers, ask them what their pain points are, find out what they want and need, and develop strategies and tactics to really enhance and evolve the program around those wants and needs.

Experiences are what consumers now demand out of brands, not just products or compelling offers. An experience is something that can be truly unique to your brand and it’s what will keep customers coming back.

Tom Caporaso is the CEO of premium loyalty solutions pioneer Clarus Commerce, with over 24 years of experience in the retail, e-business and customer loyalty industries.