loyalty programs

While loyalty programs have been used for a long time to retain existing customers and also woo some new shoppers to a brand, ineffective programs can be costly. One bad experience can permanently sour the relationship a consumer has with a brand.

Creating an effective program requires a clear strategy and nimble tactics as well as a clear understanding of the customer. Here, Eve Kolakowski, chief executive officer at loyalty platform Rymax, discusses what it takes to create a successful program — including opportunities for using business-to-consumer strategies in business-to-business loyalty programs.

WWD: Consumers are often enrolled in loyalty programs they don’t use. Why?

Eve Kolakowski: That’s absolutely correct. Studies indicate that the average U.S. household has enrolled in more than 18 customer loyalty programs, but only about eight are active. Consumers demand value and want cost savings, bottom line. They also appreciate personalized service that speaks directly to them; it makes them feel part of something bigger, so they become loyal to those kinds of brands. If they don’t feel they’re getting those things, they’ll focus attention — and dollars — somewhere else.  

Consumers like to have a lot of options, and shopping for rewards is an experience for them. We’ve observed trends where Tory Burch sandals are paired with another Tory Burch accessory, like a piece of jewelry, to complete the look. The same trend is seen in men’s: If they’re purchasing a Ferragamo belt, they’re more likely to also purchase Ferragamo shoes or cufflinks to complete the look and tell a more comprehensive brand story.

WWD: How would you define a successful loyalty and rewards program?

E.K.: Maximum client engagement and continued participation are the true definitions of program success. These two ingredients are key to continued client retention. A successful loyalty and rewards scheme offers much more than just discounts and promotions; you want to create a brand ambassador for your company and drive repeat business. The competition is steep and customer reviews are heavy influencers.

Quality is demanded. In loyalty marketing, you must show sincere and timely appreciation to the customers to keep them loyal. I always recommend rewarding with trending, in-demand brands to keep customers coming back.

WWD: Loyalty programs are usually associated with b-to-c businesses. How would it work in b-to-b?

E.K.: There is much to be learned from b-to-c loyalty programs in the fanfare they attract, but at the core is a deep understanding of what drives value for customers and what will create a brand ambassador. The success of any b-to-b consumer loyalty program comes down to the functionality of the recognition platform, your relationships with the reward offerings and your knowledge of your clients’ buying habits.

The dated loyalty model of cash incentives doesn’t translate as well to business customers. Customers expect strategic design, an easy-to-use online platform, ongoing management, immediate order tracking, non-automated customer service and reliable fulfillment.

Companies that take advantage of employee recognition programs in conjunction with customer loyalty programs are often the most successful. Employees can independently engage businesses; increase sales through a reward system, and provide a reporting history that enlightens the business as to what motivates their employees best. This type of program is often not considered when thinking about “loyalty and rewards” programs.

WWD: Can brands launch a smaller-sized loyalty program that can later be scaled?

E.K.: Certainly. Depending on the size of the business, the mind-set of the client and the budget allocation, there are a lot of loyalty program options. If they’re an e-commerce business only, there are a wide variety of plugins and apps that help facilitate this, like Smile.io. I’ve seen many smaller-scale businesses try to manage a point system in return for products, but as they grow, they need more to offer and a team to handle it all.

Whatever the company’s preference, loyalty marketing should be part of the strategy — it is much cheaper to retain your current customers than to solicit new ones. 

WWD: Consumers are quick to switch brand loyalty. How can this be addressed?

E.K.: Customer expectations have changed significantly over the years. Amazon has created a culture of accessible variety and the expectation of instant gratification, so companies need to be smart and nimble when vying for a customer’s attention. The incentive industry trends are no different.

At Rymax, we have built a brand portfolio that appeals to everyone, from Millennials to Baby Boomers — there are currently more than 20,000 active stockkeeping units on the platform.

Although the pandemic has affected corporations worldwide, many of our loyalty programs are surviving and thriving as cash is not as liquid as it was before. That said, during these trying times, with unemployment rates higher than ever, customers have had to diminish their brand loyalty to purchase items at a more affordable price point, rather than tried-and-true brands that may be more expensive.

So brands should pivot as well. Rymax has partnered with brands that offer more smart home and in-home products, to help accommodate those working from home, homeschooling and entertaining outdoors.

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