Loyalty Programs Must Have Flexibility

When putting together a loyalty marketing program, remember it’s the rewards that will keep your customers coming back.

There are several keys to a successful loyalty program. You must provide a reward that has value to your consumer; you must make that reward easy to earn and to claim; you must keep your promise to the consumer about using and not abusing the information you have collected from them; and you must deliver those rewards via a medium they use.

Loyalty programs have been in use for some time. As early as 1895, C.W. Post issued the first coupon for Grape Nuts cereal. Sperry and Hutchinson introduced Green Stamps about one year later. Your grandmother may have collected dishes that came with the oatmeal or dry goods she purchased during the Depression. Your mother may have pasted in trading stamps or collected Betty Crocker coupons that could be redeemed for merchandise. As a child, you may have collected the comics out of bubble gum wrappers to redeem them for a prize. Even today, you may redeem coupons for discounts at the local store for your favorite products, or earn points for being a frequent user of goods and services.

Loyalty programs are still ruled by the principle that you want to create a relationship with your customers so they use your goods or services again and on a regular basis. What’s new is that loyalty and incentive programs are being delivered via the Internet.

The Web has quickly become a delivery tool for loyalty marketing programs. Marketers have realized the Web is an effective way to reach a targeted market and form a relationship. A study by Forrester Research found that as of 1999 there were 42 million households online, and 60 million are expected by 2004. Jupiter Communications notes that Internet users spend 7.1 hours online per week. That is almost twice as much as the time spent with newspapers or magazines, both of which have been traditional delivery vehicles for incentive and loyalty marketing programs.

Companies must realize that delivery methods are changing and that to remain competitive they must change with the times. They must deliver their offers the way the consumer wants to receive them.

The success of these programs is still determined by the original standards, even though they are delivered via the Web.

The offer must have value in the eyes of the consumer. If it is a coupon or discount, it must be substantial so that the consumer thinks it is worth the effort to redeem it. If it is a program where the user collects points, the items users save toward must be of value to them.

The offer must be easy to get and claim or, in the case of a frequent-user program, the points must be easy to earn and redeem. If it is difficult to earn points or if it takes too many points to earn an item, the users may lose interest and think the program is not worth the effort because they will never reach the goal of earning the item they desire. Also, if users think they are bombarded with e-mails and surveys, they may think it is too bothersome to try to earn the points.

The incentive providers must keep their word in terms of not abusing the information they have collected. Privacy with the Web is of utmost concern to consumers. Unscrupulously selling users’ information to other parties is a quick way to an unsuccessful program.

Several loyalty and incentive marketing models use the Internet. Most of them use opt-in or permission-based criteria. Users give their permission and information to the company. In exchange, they are rewarded with savings offers and other incentives, usually served via e-mail or from a Web site that requires a password to enter and take advantage of the offers.

The savings offers given can include, but are not limited to, online savings offers, discount coupons for offline goods and services or sometimes even points that can be accrued and redeemed later. Users may earn even more points for giving additional information, taking surveys, viewing ads and reading e-mails. In addition, they may earn points for purchases made through the provider’s online shopping mall. Some incentive marketing companies even develop programs where users can earn points toward a college education.

What does the future hold? The key will be flexibility – the ability to merge clicks and bricks.

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