What will loyalty programs look like in the future?
April 28, 2015

Loyalty programs can be beneficial for a variety of businesses, including retail, quick-service restaurants, convenience stores, airlines and the hospitality industry. When implemented correctly, gift card and loyalty programs drive bottom line results and boost customer satisfaction. However, these programs need to be crafted around what consumers want to be effective. What makes a great loyalty program, and what can merchants aim for in the near future?

Program relevance is paramount
Depending on the industry, customers will want different types of loyalty program rewards. Although major airlines were among the first to pilot loyalty programs, consumer preferences have changed a great deal in a relatively short time, especially with the advent of mobile payments. For example, quick-service restaurant patrons may want free food items or the ability to place an order from a mobile app. Retail customers might be more interested in discounts toward future purchases or early access to new product lines.

A cookie-cutter approach to gift card and loyalty programs is no longer effective. Program benefits need to be tailored to the industry and a brand's unique customers.

Many traditional loyalty programs use punch cards. While this gives customers an incentive to continue shopping at the same place because they can see how long they have before receiving a reward, punch cards are easy to lose. Additionally, more consumers are increasingly concerned with environmental sustainability, so moving away from the punch card approach helps the program stay green, according to Winona Daily News. With the wide range of mobile tools available to small-business owners, punch cards can seem archaic.

Behavioral-based rewards
Customer behavior is a standard metric for monitoring the effectiveness of loyalty programs, but this is often based on incomplete data, according to a hospitality report from Cornell University. Small-business owners need to integrate more data than repeat purchases. Social media has made consumer behavior far more complex and changed customers' relationships with brands, which businesses will need to consider in the near future. Companies must account for digital interactions. Many effective modern loyalty programs offer an omnichannel experience and allow customers to accumulate rewards through both online and in-store purchases.

However, it can be challenging to determine how to reward social interactions. While some brands offer points for social media comments, brands need to determine how to place a value on this form of engagement.

Nexus: G-WEBCD3