How do you design a loyalty program that aligns with your CRM strategy?

As part of determining what you want your loyalty program to accomplish, you need to also clearly outline the benefits for the members of the program. In order for your loyalty program to be successful, there should be an obvious benefit to the brand, and an obvious benefit to program members. Too many brands focus on how the program helps them, but don’t spend as much time designing a program that creates value for the it’s members. Whenever I work with clients on designing a loyalty program, one of the first questions I ask the client is to clearly outline the member benefits. As long as the members can benefit, they will be more likely to participate in the program, and that benefits the brand.

🚀 Be smart when defining your objectives. Here is a list of potential objectives: • Increase repurchase • Increase AOV • Increase engagement • Encourage different behaviour for example more in-store visits • Increase the number of product ratings on your website • Increase Word of Mouth Think about what moves the needle for your brand and what are the problems you try to solve. Define the top 3 priorities to avoid getting lost. You like this? Follow me for more.

When launching a loyalty program, it's crucial to ensure that its goals align with the different phases of your brand's journey. Whether you're looking to boost repeat purchases, foster referrals, or enhance overall customer satisfaction, the loyalty program should act as a strategic asset to advance your brand's mission at every step. Understanding the stages of the brand lifecycle enables you to customize the loyalty program to meet specific objectives. In the intro, focus on awareness; in growth, capture market share; in maturity, retain customers; in decline, sustain relevance. Regardless of where your brand stands in its lifecycle, it's imperative to design your loyalty program with a clear, measurable business objective in mind.

Clear objectives ensure your loyalty program and CRM efforts work in unison. Are you aiming to boost repeat purchases, increase customer lifetime value, or gather valuable customer data? Knowing your goals allows you to tailor your loyalty program. Imagine a program rewarding frequent purchases with exclusive discounts. This incentivizes repeat business and aligns with a CRM strategy focused on customer retention. By defining clear objectives, you can create a loyalty program that seamlessly integrates with your CRM strategy, driving measurable results and strengthening customer relationships.

Depending on the business model & and revenue strategy, it may be prudent to focus the loyalty program on specific customer segments rather than the entire base. For example, if the objective is to enhance retention among high-value clients, a tailored loyalty program offering premium benefits may be developed. Conversely, if the aim is to drive repeat purchases from occasional buyers, a different set of incentives might be more appropriate. The key is to ensure that the selected customer segment aligns with the defined objectives of the loyalty program. By concentrating efforts on the segments that best fit the goals, the impact and effectiveness of the loyalty initiatives can be maximized

🚀 Segmenting your customers is key to success IMPORTANT: The segmentation you choose depends on your campaign objectives. Try to understand the following • the segments that are the core target group • their current behaviour • the desired behaviour • how to achieve the desired outcome Be specific about your segments and what you want to achieve and design your plan accordingly. Like this? Follow me for more.

Segmentation allows you to tailor rewards and engagement strategies for distinct customer groups. By leveraging your CRM data, you can segment customers based on purchase history, demographics, and brand interaction. This allows you to offer targeted rewards that resonate with each segment. For instance, high-value customers might receive exclusive discounts or early access to new products, while first-time buyers could be incentivized with personalized welcome offers. By segmenting your audience, you ensure your loyalty program caters to individual needs and preferences, fostering stronger customer relationships and maximizing program effectiveness.

Loyalty programs are effective if you are in an industry that has one or more of these characteristics: 1) The fixed cost of business is high, and the marginal cost of serving another customer is low. eg. Airlines, movie theatres 2) The chance of switching to a competitor is very high and you have to try hard to retain your customers eg. eCommerce marketplaces, online travel aggregators 3) Lifetime value of a customer is very high, and that's the only way to sustainable economics eg. OTT, D2C brands If your industry isn't in any of these spaces, then don't waste your time on loyalty programs.

🚀 Choosing the right program type is key to success There are many different options to choose from • Points based • Cash back • Tiers (e.g. gold, silver) • Subscriptions (pay for benefit) • Gamification • VIP programs only for high value customers • Referral programs • Experiential • Coalition in collaboration with other brands Do some research to find out what best resonates with your key target groups and helps you to achieve the desired outcome of your loyalty program. You learned something new? Give me a 👍 And follow for more.

While it's challenging to prescribe a one-size-fits-all approach, certain guidelines can help. Points systems excel when purchases occur regularly, such as in frequent transactions. Cashback appeals to single large purchases. Referral programs are effective for customer awareness and acquisition. Tiers thrive when earned, symbolizing prestige beyond the brand, as seen in Airline FFPs. These guardrails aid in selecting the most suitable loyalty program for specific business contexts.

The program type should incentivize behaviors that benefit your CRM goals. Are you aiming to drive repeat purchases, encourage customer referrals, or gather valuable purchase data? Different program structures cater to these objectives. For instance, a points-based system rewards frequent purchases, while a tiered program incentivizes higher spending and engagement. By aligning your chosen loyalty program type with your CRM goals, you ensure it effectively motivates desired customer actions and generates valuable data for deeper customer insights within your CRM system.

Simplicity and clear communication are essential in establishing earn rules. Each incentivized action should align with behaviors beneficial to the brand. For instance, a credit card issuer's requirement of making three transactions over $100 monthly for 1000 bonus points presents a clear mutual benefit if met. The economics of point redemption typically dictate burn rules. Balancing the perceived value of loyalty currency with program sustainability is crucial. Ensuring redemption avenues and channels remain viable maintains the program's long-term viability.

When designing a loyalty program for your customers, I always advise you to provide value to them without complicating the conditions because customers interact positively with loyalty programs that deliver value immediately to them. Let them feel that.

Aligning your loyalty program with your CRM strategy hinges on clearly defined program rules. This includes outlining how customers earn points or rewards, what actions qualify (purchases, reviews, referrals), and the redemption tiers or thresholds. Transparent and well-defined rules are crucial. By leveraging your CRM data, you can personalize these rules to incentivize desired customer behavior. For instance, you might offer bonus points for abandoned cart recovery or reward high-value customers with exclusive redemption options. Clear, CRM-informed program rules ensure a fair and engaging experience, fostering long-term customer loyalty.

Integrating our loyalty program and CRM via a CDP streamlines customer engagement. Through our mobile app, customers earn stars for purchases, tracked by the CRM. The CDP unifies data from online and offline stores, providing a holistic view of customer interactions. For example, a customer earns stars online, and then redeems them at a physical store, with all transactions logged in the CRM via CDP. This integration enhances personalization and fosters stronger customer relationships.

Synchronizing loyalty programs with CRM practices is essential in meeting modern customer expectations. The future may revolve around personalized reward recommendations and offer generation. Though challenging, emerging products indicate a positive trend and could become more accessible for program owners to adopt, potentially enhancing efficiency and effectiveness

Integrating a loyalty program with a Customer Relationship Management (CRM) system in the Canadian healthcare sector is challenging because integrating loyalty programs with CRM systems involves handling sensitive patient data. Healthcare in Canada is heavily regulated. Ensure that loyalty programs comply with provincial and federal laws. It is essential to work closely with legal and compliance teams, and regularly review program policies.

🚀 How to measure the success of your loyalty program? The metrics you choose should reflect your program's objectives. Here are some KPIs that are frequently looked at • Enrolment Rate • Engagement Rate • Redemption Rate • Customer Lifetime Value (CLV) • Churn Rate • Discount amount However, measuring the performance of a loyalty program is complex! The biggest mistake is to compare "non program members" to "program members" because of Selection Bias i.e. customers that are already loyal have a higher chance to sign-up, because they benefit the most. Hence, the best approach is to compare loyalty behaviour before and after signing up to the program. You learned something new? Give me a 👍 And follow for more.

When selecting perks or rewards for your loyalty program, focus less on discounts and sales for products, and focus more on brand access. Remember, the goal of your loyalty program is to build loyalty toward your brand, not to a sale or discount.

🚀 Be critical about loyalty programs The performance of most loyalty programs is below expectations and many loyalty programs fail to increase loyalty or other program KPIs. Implementation cost, operational cost and value dilution might often outweigh the benefits (if they exist and are measurable) The best thing, is to define the REAL business objectives. It might be "increasing loyalty in NOT so loyal customers". But what makes customers "unloyal"? Is it really the absence of a loyalty program? What is the problem you are trying to solve? Being clear about the problem and its nature will help to understand if and to which extend a loyalty program is a good solution. You learned something new? Give me a 👍 And follow for more.