Loyalty scheme – how can we boost participants’ engagement?

It has been over a dozen months since the decision to launch the loyalty programme. Hundreds of hours were spent on strategy, research and lengthy workshops, during which half the organisation was involved in drawing up the programme’s rules. The creative concept was fine-tuned. After its launch (or relaunch, or from the moment you took over responsibility for it), the programme seemed to be performing as expected. However, over time, you notice that participants’ activity is declining, eventually levelling off at a point where you define an ‘active participant’ as someone who has made at least one loyalty transaction per month. Sound familiar? It certainly does to me, as I’ve been asked to help with this kind of situation on more than one occasion. What is the root of the problem? Let’s take a closer look at the situation.

Loyalty scheme – what’s it all about?

It is widely recognised that consumers are the driving force behind the success of any business. End consumers, to be more precise. Introduction loyalty scheme can bring a company many benefits. These include, amongst other things, strengthening the bond between the brand and the customer, expanding the customer base, and increasing both the frequency of purchases and the average basket value. Research findings show that nearly 50% of loyalty scheme participants buy more products if they are members of a particular loyalty scheme. However, there is also another side to the coin. Around 45% of Poles surveyed state that they are prepared to switch to a loyalty programme run by a competing brand or retail chain if it offers them more favourable terms. So let’s consider why anyone in your organisation might need a loyalty programme. I don’t know, because it’s not my organisation. In all the organisations where I work with i360 clients on loyalty programmes, the KPIs are set to measure the extent to which the key objectives set for the loyalty programme are being met. There are usually dozens of these, but taken together, they are all intended to increase volume by boosting the frequency of purchases and the value of the shopping basket generated by a loyalty programme participant, compared with the averages for each retail outlet. Awareness of these objectives – and, equally importantly, a shared understanding of them across all departments and at all levels of management – is the key to success.

Loyalty schemes – how to build customer loyalty?

Are we able, in this day and age, to capture consumers’ interest to such an extent that they remain loyal to a brand? Of course we are, provided we take into account a few key factors that will ensure customers remain genuinely loyal in the long term.

According to the latest statistics, the most important factor influencing customer satisfaction is the product (or service). If it is not of the highest quality (within its price range, of course), so that the buyer is confident they have made the right choice, I would not start by organising a loyalty scheme, but by improving the product range. On more than one occasion at i360, we have declined to take part in work on setting up a loyalty programme if we were not certain that the offering to be covered by the programme was up to standard. After more than 20 years of loyalty programmes operating in Poland, consumers are wary of the proverbial ‘smoke and mirrors’ tactic of using loyalty schemes to mask poor-quality products or services.

Loyalty scheme – participant activity

User engagement within a loyalty programme is crucial. Its ultimate success depends on it. The frequency of visits to the loyalty programme’s website, use of the app and redemption of discount vouchers is the primary driver of increased transaction frequency. However, I cannot help but feel that, amongst the more than 120 programmes operating in Poland, only a handful of those managing them have understood what customer engagement really entails. Above all, the best programme managers understand that they must ensure the customer has a positive experience with the brand. This is vital to ensure the customer remains loyal and does not switch „permanently” to the competition. The organiser of a loyalty programme must be credible in the eyes of its customers. Participants should feel that they are valued by the organiser, and that the benefits offered to them are of the highest quality. A dry message such as „collect points” is not enough to run an effective loyalty programme in the long term. It is essential to use gamification techniques, organise lotteries and competitions, offer e-scratch cards via a mobile app, collaborate with influencers, maintain a frequent and engaging communication strategy, and manage social media and a YouTube channel – not to mention. In short, maintaining an active dialogue with loyalty programme participants.

Loyalty scheme – rewards

The organiser of a loyalty scheme should, through appropriate measures, encourage participants to take an active part in the scheme. The easiest way to do this is to ensure that consumers derive benefits from being members of the loyalty scheme in question. Attractive rewards and a positive experience are powerful motivators for users, which leads to increased activity and more frequent transactions. The selection of benefits in a loyalty programme should be carefully considered and based on the target group’s preferences – their needs and expectations. Inappropriately selected rewards will not motivate active participation.

What should we offer rewards for? For joining (how many times have I explained in presentations why it’s worth it?), for an anniversary of membership, for length of service, for points earned or other forms of recognition, on birthdays, and as a form of compensation for mistakes such as delayed deliveries. What rewards work best? There is no single answer to this question, as it all depends on the target group – its demographics, income level, expectations and previous experiences. As a general rule, apart from physical rewards (which are now in a significant minority), discounts and reductions are offered, along with the option to pay for current transactions using points, cashback, invitations to special events and a whole range of experiential rewards.

Combining the above elements skilfully will lead to increased participant engagement and, consequently, to the success of the entire loyalty scheme. That is what I wish for you.

How to prevent abuse in loyalty schemes, Management of promotional lotteries, „Premium” loyalty schemes and paid membership , Methods of paying out cash prizes