Loyalty programs can be extremely effective at driving cross-channel traffic,especially if that is a key objective of a program.
Specific segments of customers can be isolated and offered opportunities to be rewarded for changing their behavior. Increasing channel usage temporarily should lead to permanent increases in some of the promoted population. And voila, objective accomplished.
First, let’s boil a loyalty program down to its basic components. They include:
• A storage of value accrued by the purchases and behavior of a consumer.
• Hard benefits, which include monetary, product or service rewards that can be acquired by the consumer in exchange for the accrual.
• Soft benefits, which include non-financial advantages that program members receive that are not available to the general public.
• Surprise and delights, such as promotional opportunities like coupons or double points, or unannounced benefits, like a no-strings-attached gift card at the holidays.
Most loyalty programs can be described by analyzing these four components.
The basic premise of a loyalty program is that benefits drive behavior, which results in accrual, which in turn can be exchanged for benefits. What makes loyalty programs fundamentally different from typical promotions is this presence of accrual, which separates the behavior from benefits. That is, customers can accrue value over time and store it up, waiting to use it at the time of their choice.
Accrual is a form of promotional currency, one that costs far less than an actual discount and does not violate certain vendors’ requirements for coupon exclusion.
So with that premise in place, with the assumption that the goal of the program is to drive cross-channel traffic, how would such a program work?
There are many, many ways to influence behavior when the four loyalty components are in place. Let’s look at several of the most common tactics and examine why they drive cross-channel traffic.
Require e-mail for membership. This ensures all customers will have to converse with you online, regardless of their purchasing channel. It’s a fair exchange for the benefits you will offer through the program.
Include point acceleration when you buy online. Targeted at in-store buyers, delivered via e-mail, this promotion is far less expensive than a coupon, but it delivers real lift. An aggressive offer, such as triple points, should be sufficient to drive a new group of customers to purchase online who had not before.
Hold an in-store event for non-store purchasers targeted at those within 15 minutes of a store. This soft benefit puts a human face on the company for those who only know the company through the Web site or as a voice on the phone. Introducing the attendees personally to the store manager builds that connection.
Include bonus points for completing a survey or finishing a profile. In this case, the intent is to drive usage of the site, plus gather additional information on a consumer.
By targeting non-online purchasers, offers linked to surveys have the added benefit of reducing barriers to an online transaction by making this segment more comfortable with interacting online.
Give rewards redemption. Nowadays almost all reward redemption is online, which has the benefit of increasing usage of the site, even by those who only shop instore or through the call center.
Taken together, and structured so they are triggered on a regular basis to qualifying customers, these tactics reward a change in behavior, leading to increased usage of new channels.
Just as with any direct marketing or relationship marketing program, testing and tweaking is crucial to finding the tactics that lead to the best ROI. But with a loyalty program in place and a clear objective to drive cross-channel behavior, it is much easier to make it a reality.
