Thursday, April 23, 2015

Are Loyalty Reward Programs Leading To Customers Loyalty?

The concept of loyalty reward program has emerged in the 90s, with the idea to create specific advantages to loyal customers in order to keep them away from competition. The concept is simple: In a mature market, it is more expensive to get a new customer than to retain one.

Loyalty reward programs also has a great advantage as it allows companies to own massive customer data base where they can plug in an efficient CRM program. Nevertheless, basic loyalty reward programs have been questionned lately, as it is easier for customers to switch companies and services:
  • The access to information for customers is easier than ever
  • The amount of promotions and discounts available at a very same time has sprung up, lowering the advantages of being loyal.
  • Customers are able to shop online, on mobile, in stores, which makes it also easier to trigger the sale, and to wait for shopping in the favorite store more difficult
  • Moreover, if loyalty reward programs were a real tool to stand out of the competition, nowadays most of the companies own one, which also lower the feeling of loyalty.
Here is an interesting article which discuss about how to give a boost to your loyalty program. What matter the most nowadays is customer and shopping experience, which creates a real added value and differenciation.

Now, I believe that loyalty reward programs may give an extra lift now. Indeed, there are two important trends that may help the loyalty reward programs to keep its importance:
  • Big data: More than ever we are able to leverage the full potential of all the customers data one company own. Thanks to big data, the ability to segment customers and/or providing him a unique experience is possible.
  • Ibeacon and mobile phone technologies: By having information thanks to mobile technologies, especially Ibeacon may allow businesses to have clear view of people's shopping experience, and their journey in one store. 
By mixing big data and Ibeacon, one company may develop a complete customer relationship management program, that will lead to effective loyalty.