Stand out thanks to your loyalty program
Customer loyalty is one of the major challenges in marketing, and more broadly, for brands and retailers. The reason is simple: loyal customers are easier to engage. So how does a brand today maintain a long-term relationship with its customers? By keeping it alive through a loyalty program.
While a powerful tool for retention, a common mistake made by brands is assuming that simply setting up a program is enough to bring customers back. Of course, not having a loyalty program would give an edge to competitors who all have one. However, it’s essential to keep the program dynamic and stand out from existing ones. So, why not use digital gift cards as a key differentiator?
Most loyalty programs lack differentiation
What are the benefits of a loyalty program for brands?
- Repeat purchases: A customer enrolled in a loyalty program is more likely to make repeat purchases at the brand's points of sale. With the right actions at the right time for the right customer, they will be sufficiently motivated to buy again.
- Retention: A well-structured loyalty program can significantly reduce the temptation for customers to switch to competitors. In fact, a strong program can make consumers much less price-sensitive.
- Revenue growth: Through loyalty programs, brands can segment customers based on their purchasing potential and highlight those with higher spending habits.
- Increased average basket size: Loyalty actions can encourage customers to buy more products.
- Enhanced customer insights: Customers who are part of a loyalty program are easier to identify, and their behavior within the brand's points of sale can be analyzed. This data allows for the creation of offers and services that closely align with customer expectations.
But many programs use the same loyalty tools
For loyalty programs to deliver these advantages, they must stand out from competitors. Unfortunately, this is rarely the case. Once implemented, many brands struggle to create a truly unique loyalty experience. If we take a closer look, most programs rely on the same tools and mechanisms. For example, in the grocery retail sector, it's hard to differentiate one loyalty program from another, which explains why consumers often carry multiple loyalty cards. According to the Loyalty Observatory, 60% of consumers own more than three loyalty cards.
Indeed, the majority of brands (75% according to Sheer ID) cut into their margins to prioritize customer retention. Through cashbacks, promotional coupons, e-couponing, SMS, and emails, some major brands spend hundreds of millions each year to retain customers. However, this intense practice has led consumers to expect never to pay full price. Discounts are no longer exceptions—they've become the norm, something everyone expects. As a result, they are no longer perceived as genuine rewards by consumers.
So, should brands abandon promotions altogether? Of course not.
How to create a successful loyalty program
Leverage customer data
Discounts remain an essential component of loyalty programs, but consumer motivations aren't solely driven by price. While some smart-shoppers are always on the lookout for deals, others prefer to build their relationship with a brand based on different aspects. Some may value useful associated services, others may be drawn to a more hedonistic experience, while some may prioritize the social dimension of a brand.
It's entirely possible to cater to each consumer's unique needs and preferences. With today's technology, gathering enough information to identify different customer types is straightforward. It's equally easy to offer a more personalized program and provide relevant rewards that influence long-term buying behavior. A well-tailored reward gives customers a solid reason to continue choosing your brand.
The importance of selecting the right rewards
Rewards should be distributed optimally throughout the customer lifecycle to gradually build trust and foster long-term engagement. A welcome reward is effective in encouraging customers to join the program, and over time, more valuable rewards can be offered as the relationship with the brand deepens.
However, rewards should neither be too hard to earn nor too easy. Striking the right balance is key to maintaining motivation and positively influencing consumer behavior.
Another crucial factor is ease of use—customers should never feel constrained or discouraged by a complicated process when redeeming their rewards.
Finally, it's highly recommended that rewards align with the brand’s identity. Customers expect to receive benefits that reflect the brand's image and universe.
The e-gift card: a relevant reward
The e-gift card: an effective loyalty tool
When it comes to loyalty programs, digital gift cards are highly regarded as an effective reward by both consumers and brands. First, they are incredibly convenient for customers. The card is instantly available in its digital form, allowing customers to choose whether to use it immediately or save it for a future purchase.
For brands and retailers, e-gift cards are easy to generate, taking only a few seconds. They serve as a powerful tool to drive consumers to visit brand stores, whether online or physical. It's been observed over the years that customers often treat gift cards as "already spent money," using them as an opportunity to try new products they might not have considered purchasing otherwise.
Moreover, gift cards reflect the essence of a brand, perfectly conveying its values. The ability to tie brand loyalty and the brand’s identity into a single offering makes gift cards a highly relevant and powerful tool.
Using e-gift cards wisely
However, like any tool, e-gift cards must be used correctly depending on the context and the customer. As a versatile reward, e-gift cards can be easily adapted to different consumer profiles:
- Hedonistic Customers: These customers seek pleasure in purchasing. Receiving an e-gift card from a brand feels like a special treat, allowing them to indulge in something they truly enjoy.
- Social Customers: For them, a gift card is associated with a special occasion, like a birthday. Receiving one from their favorite brand holds more meaning than a standard discount.
- Thrifty Customers: Always on the lookout for deals, offering them a gift card tied to a specific product range can encourage them to make a purchase. In some cases, gift cards can even be seen as a type of discount.
It’s essential to tailor the presentation of the gift card based on the customer type. For example, with hedonistic customers, it’s better to offer a gift card in exchange for loyalty points or simply as a thank-you for being a loyal customer.
For thrifty customers, however, the gift card should be tied directly to a specific product or product range. For example, after purchasing a tech product, the brand could offer a digital gift card with a determined value. Perceived as a promotion, this technique encourages the customer to return to spend the card in-store.
Another factor to consider when using gift cards in loyalty programs is that while many customers are comfortable with digital gift cards, some may still prefer physical ones. In any case, brands must ensure that the gift cards are omnichannel, meaning they can be used both in physical stores and online.
Using gift cards throughout the loyalty program
Step 1: Incorporating the Customer into the Loyalty Program
To encourage purchases or show appreciation to a customer, brands can use gift cards as rewards instead of simply lowering prices. For example: "Spend €50 and receive a €5 e-gift card." This approach helps avoid attracting only bargain hunters and fosters a stronger connection with the customer, who will return to use the card and likely make additional purchases.
Step 2: Accelerating the Customer’s Lifecycle
Once the customer is engaged, the e-gift card becomes an excellent tool to keep them involved. Whether through point systems, birthday gifts, or limited-time holiday offers, it gives customers extra purchasing power while strengthening the relationship. This approach accelerates the loyalty cycle while boosting profitability.
Step 3: Staying Top of Mind
An e-gift card stored in a mobile wallet keeps the brand visible through push notifications. This ensures that the brand stays in the customer’s mind and encourages them to return, often spending more than the value of the card. Such follow-up reinforces loyalty while creating additional purchasing opportunities.
Step 4: Expanding the Customer Base Through Referrals
Referral programs are an effective customer acquisition tool. Offering an e-gift card to both the referrer and the referred party incentivizes both to take action. This strategy creates a virtuous cycle where loyal customers become brand ambassadors, bringing new clients to the brand.
Step 5: Enhancing Customer Insights and Improving Data
By leveraging e-gift cards, brands can gain a better understanding of shopping behaviors: basket size, products purchased, and more. This provides valuable insights to refine loyalty strategies. E-gift cards can also serve as a tool for gathering additional data through surveys or product reviews, enhancing customer relationships while keeping databases clean and up-to-date.
As we have seen, loyalty programs are strategic touchpoints for retaining a brand's customers. The challenge today is not merely in implementing these programs but in creating a genuine loyalty experience for both existing and new customers. With consumers having access to a wide range of loyalty programs, it’s essential to stand out by offering impactful and relevant experiences. Providing rewards such as digital gift cards that align with customer motivations and the brand's values can make all the difference.
