How do you decide when to create a loyalty programme?
All businesses will eventually face the existential question of whether they should implement a loyalty programme or not. Understanding the value in doing so is paramount— customer loyalty is a big question for a lot of brands, and few know where to begin to devise a promising loyalty scheme, with many brands lacking an understanding of the potential return on investment. It is also integral for brands to have a business case prepared prior to formulating the loyalty programme’s design, as this knowledge will sway the development entirely.
Why brands might be thinking of this now
There are several factors that may prompt the creation of a loyalty programme– increasing share of wallet, encouraging customers to buy directly from a brand versus through a third-party retailer, or enhancing direct customer relationships to drive repeat purchase behaviours. No matter what the driving forces, businesses have become increasingly aware of the impact that customer insight has on informing an effective loyalty programme and the potential cost and risk of not introducing one into your own business.
What risks are associated with creating a loyalty programme?
Improperly planned and executed loyalty programmes can result in hefty costs for businesses, plummeting bottom line profit figures and an inability for revenues to bounce back.
Additional elements you must consider when implementing a loyalty programme include:
Getting the value exchange right
If customers do not understand the point or see the value behind your business’ programme, it will not be successful. Getting the value exchange wrong can erode your brand’s impression on customers. If the programme appears worthless as opposed to rewarding, it will fail to increase customers’ sentiment or engagement with your brand.
Getting the level of innovation right
Loyalty programmes must be innovative and uniquely tailored to a diverse customer base. Your business must meet customers’ expectations in one cohesive programme versus through multiple solutions, which demonstrates the importance of value exchange– meeting the wants of customers without sacrificing your business’ value.
Getting the loyalty mechanic right
You must be mindful of what customers are looking for from a loyalty programme, but this understanding must be backed by a data-driven approach that allows you to understand the unique selling point for your customers. There are a few approaches you can take:
- Points-based loyalty programme: Customers are given points with every purchase they make, and when they reach a certain number of points, the points can be used towards a discount or reward.
- Subscription-based loyalty programme: Customers that sign up for subscription-based loyalty programmes will pay for their subscription upfront or in monthly or yearly instalments to receive exclusive discounts or rewards.
A lack of access to customer-centric data and an understanding of your customers’ wishes, however, will hinder a loyalty programme’s capabilities.
What should you consider before creating a loyalty programme?
If you can answer these three questions, you can conclude whether now is the time to create a loyalty programme.
What steps should your business take to implement a successful loyalty programme?
How can CACI support you with implementing a loyalty programme?
CACI’s data science capabilities and Customer Engagement consulting team can determine the actual costs that your business will face in running a successful loyalty programme and support your business through an innate understanding of loyalty across enterprises.
We do this by using our own proprietary data, data science, and expertise to understand the headroom in the market and help determine KPIs, understand which of your customers want a loyalty programme and how they want it to look to inform what potential opportunity exists. Areas that we assess to inform this include demographic richness, compliance for use, permissions, and our own products to fill any gaps around customer segmentation to determine who customers are and ask the right questions.
Our teams of data scientists and consultants will scenario plan with your business to comprehend the mechanics and experiences that must served and managed to your customer groups to build the pilot. Once this business case is understood, and a feasible pilot market has been identified, we can design a sophisticated end-to-end offering to help you deploy a successful loyalty programme.
Could your business benefit from a loyalty programme? To learn more about how CACI can help you, contact us here.