Which loyalty program structures and benefits do members prefer?
One of the most common questions I receive on my loyalty travels relates to program structures and benefits...which loyalty program structure and benefits do members prefer?
Before answering this question I begin with a set of 'strategy before structure' questions to gain clarity on:
- Why a program? Do you really need a program? (This is a powerful process to uncover and clarify goals for the program and gain leadership alignment)
- What's the vision for program? (A brand has a vision and so should a program)
- What are the specific objectives? (what are the behaviour changes the program is aiming to influence);
- How will success be measured? (clarity upfront on our three V's of Volume, Value and Velocity PLUS retention, Return on Loyalty investment...amongst others)
- Who is the program for? (understanding the customers' and teams' desires/needs for a program, where a program can add to their lives or more importantly solve a problem)
When these questions are clarified, we can then start evaluating the program structures and relevant benefits that suit the 'strategy'.
The annual benchmark loyalty research study - For Love or Money 2019, identified five different program structures and benefits for members to identify their preferences.
We defined these in a generic way to understand what motivates members and what might influence their buying behaviour. They were:
- Earn and redeem rewards within vs beyond the brand's specific program eg with external partners
- Rewards for transaction - how much and how often they spend vs tenure - how long they have been a customer
- Rewards that are quick and small vs more substantial rewards that take longer to earn
- Rewards with small value and no minimum spend vs larger value rewards with a minimum spend
- Points vs cashback
- Tiered program structures vs no tiered programs
While the For Love or Money 2019 report reveals all the results and preferences across genders and the generations, the summary of the findings were:
Australian loyalty program members prefer to:
- Earn and redeem rewards outside the brand's program eg with relevant partners
- Be rewarded for how much and how often they spend
- Earn small rewards but get them more quickly
- Earn a small reward with no minimum spend
- Earn cashback
- Participate in a program with NO tiers
Although these findings set the process for defining a program structure and benefits, it goes without saying (although I am saying it), the program structure and benefits needs to suit the program's strategy!
I hope these insights help you build a thriving program.
Have a happy loyalty day!
The Point of Loyalty is a customer loyalty and rewards program consultancy helping business improve the care and currency of existing customers.
Founder of The Point of Loyalty, Adam Posner is a loyalty and rewards program specialist helping business build thriving programs that are profitable and sustainable for the business, meaningful and desirable for their members and with team belief and buy-in.
He is author of the annual customer loyalty and loyalty program research study - For Love or Money, now in its 10th edition.
He has developed the four stage loyalty program methodology - "The DNA to a valuable loyalty and rewards program" to enhance the asset that programs can deliver and has been involved in the design and deployment of loyalty and rewards programs and loyalty research across industries including entertainment, education, pharmacy, hotels, trade, retail (various) and more recently in blockchain based cryptocurrency coalition loyalty programs.
The contents of this article are the opinion of the author. No responsibility for loss occasioned by any person acting or refraining from the action as a result of the material in this article can be accepted by the author.
