We’re all for Loyalty. We’re all about it as “The Customer Engagement Experts”! The fact is, to be truly successful, companies today must recognize the importance of customer engagement. Building customer loyalty through key initiatives is imperative in today’s marketplace – whether explicitly by offering their consumers some form of customer loyalty program – Esso Extra, Club Sobeys, Scotiabank SCENE – or implicitly, by constantly raising the bar on customer service, customer experience and customer engagement to mitigate attrition and churn.
But for the purpose of this article, we’re going to zero in on loyalty programs. Customers are often attracted to, or remain with, a brand as a result of “rewards” they are offered. Today we know we have significant power as consumers and the more loyal we are, the more we expect that power to be honoured, cherished, recognized and rewarded.
Take one of my dear friends for example. She recently purchased a trip to Brazil, ordinarily priced at approximately $1,100, for less than $150 using the points she has amassed on her loyalty card. Is she a business jet setter? No. Is she a particularly frequent traveller? No, not any more than most. Yet, the rewards paid to her by her credit card of choice paid off. As a result, my other dear friend, often sceptical about the cost (and value) of loyalty programs, signed up right away!
So are loyalty programs worth it? Of course. Does it “pay” to be a member of loyalty programs? Sure! The question is, how much?
How long is it going to take you to earn that $10 discount at your local gas station or at your supermarket of choice? Well the answer, we all know is, it varies. And this is where the question of “value” enters the discussion. How do you evaluate the value of the rewards that loyalty programs provide? For example, one program may promise 5,000 points on sign up while another similar program – perhaps even by a competing brand – may offer only 2,500. So why ever would I consider choosing the program offering 2,500 points over one offering 5,000?
Here are 5 major reasons why:
1.What does the program cost?
While many loyalty programs are free, some come at a cost. Credit cards, for example, can offer the member amazing benefits – VIP lounge access, free or seriously discounted flights – but these often come at an annual cost for owning the credit card.
2.What are the options for “earn and burn”?
Can you earn them only at that specific brand, or is there a partner network of affiliated brands where you can also earn points, thereby helping you to accelerate the rate at which you earn your points? Aeroplan miles, for example can be earned at Esso, Home Hardware and many other retail locations, as well as on Air Canada Flights. And what about when it comes to burning, or redeeming, your points? Do you have the choice of how you redeem your points – instantly at point of sale, online through the website, or a reward catalogue option? How extensive is the customer loyalty program’s affiliated partner network? Can you redeem your points for other rewards at other brands? You may not always want to save your points and redeem them for flights. Could you trade in your points for cinema tickets, for example, or other rewards that may be more relevant and appealing to you, and which may not take you as long to accrue?
3.This brings me on to my 3rd point of consideration. How easy is it to earn and burn your points?
For example, once you’ve amassed a number of points, can you redeem them at point of sale for instant savings? Is your brand doing a great job of making it easy to track how many points you have amassed, and how and what you can redeem those points for? After all, this is a loyalty reward program and should mean benefits for you, the end consumer, not a lengthy time-consuming process!
4. What is the base earn rate?
Outside of promotional periods – e.g. earn double points if you spend $150 or more – how quickly can you accumulate points (or rewards)? It sounds great that you get an initial 2,500 points on sign up, but how quickly can you continue to accumulate points? And this may also be dependent on how likely you are to continue to patron the brand following your initial ‘sign up’.
5.This ultimately brings me to my final point: which is greater, the 5 cent the 10, the loonie or the toonie?
We all know the story – or some variation thereof – of the brother who attempted to con his younger sibling of his entire stash of 10 cents, luring him with the fact that the 5 cent coin is bigger in size than the 10 so surely it must be worth more. Aha! The same applies to loyalty programs. While 20 points for every $1 spent sounds far greater than 1 point for every $1 spent, what you must consider is the value of the points earned. Let’s face it, 20 times the points seems to indicate 20 times the value than the program that awards you $1 per $1 spent, but what if you have to earn 20 times the points before you could redeem for the same item, or perhaps even more? Now your 20 times the points program is a lot less valuable than your 1 point per $1 spent program.
So if you’re ever wondering about the true value of your current loyalty program (or future ones), always remember, unless your 5 cent coin is the unique 1913 Liberty Head nickel (worth $2.5million), although it’s not the smallest coin, it’s still worth just 5 cents. How about your customer loyalty program?