How loyalty club programs are shaping customer serviceOctober 6, 2015
In order to keep developing products or services people are willing to buy, businesses must learn from their customers. Doing so involves asking countless questions:
- What functions does this type of person look for in a product?
- Why does this demographic tend to neglect Service A, but gravitates towards Service B?
- When is Individual C most likely to purchase Item D?
Answering these questions effectively obligates organisations to gather information about their customers. By printing customer loyalty club cards and distributing them to frequent patrons, businesses can deduce which products and services their target audiences desire.
Analysing detailed information
Thanks to loyalty programs, enterprises can assess granular details about specific individuals. For example, an electronics retailer could learn that Jane has a preference for Samsung smartphones, but prefers Lenovo’s laptops.
Most importantly, loyalty clubs enable enterprises to scrutinise customer behaviours. Organisations have the opportunity to determine how their choices impact the incentives of individuals.
PricewaterhouseCoopers (PwC) listed several ‘levers’ (actions that influence people’s decisions) an airline could use:
- Determine the number of kilometres a person would have to fly in order to gain a specific reward
- Introduce ‘blackout’ dates when certain rewards are unavailable
- Dictate inactivity rules which cause fliers to lose points they could redeem to receive a particular service.
Making use of KPIs
Each of the levers mentioned above will spur customer reactions. However, there’s no guarantee that a passenger may respond to an action the way an organisation wants. For example, after establishing inactivity rules, some people may be off-put by the decision and switch to a different airline.
Before even purchasing an ID card printer for their loyalty programs, company decision-makers must ensure they have the means to use key performance indicators (KPIs). KPIs enable enterprises to identify whether customers are making the decisions they wish.
DataCandy also recommended measuring activation rates, transaction penetration, sales uplift and other conventional factors that show a loyalty program’s effectiveness.
How are loyalty programs performing?
In January 2015, Bond Brand Loyalty surveyed more than 11,000 consumers to assess whether enterprises’ loyalty initiative efforts were working well or poorly.
The number of loyalty members who said they were ‘very satisfied’ with the programs in which they participated rose 4 per cent from last year, accounting for 43 per cent of all enterprise users. In addition, the average number of loyalty membership cards per wallet increased to 13.3 from 10.9 in 2014.
Customers have a desire to earn rewards, and companies benefit from developing loyalty initiatives that enable them to influence patron decisions.
Companies can develop loyalty programs in order to learn about their customers and develop incentives that encourage favourable behaviours.