The importance of a good loyalty program is immense. But what is a good loyalty program and why do some succeed and others fail? While some loyalty programs listen to their customers and grow to meet the challenges of incentivizing their products others fail by ignoring those exact same things.

 

Starbucks

One big topic in terms of loyalty programs has been the recent changes to the Starbucks loyalty program, once offering a free cup of coffee after the purchase of 15. These points, called gold stars, offered a very low reward rate. Recently this has changed to become 2 stars per every dollar spent, but it costs 125 stars to get that same cup of coffee. This has changed their engagement with their customers. It has become a negative situation, which grew worse due to this creating a storm of bad social media reactions. The worst part of this is that these reactions have mostly been ignored by the Starbucks team. The lack of communication between customer and company has forced this tension to grow spiraling off twitter into actual news stories.  

 

Why isn’t it working

This loyalty program is failing to do what a loyalty program should engage with their customers positively. Loyalty programs can increase return customers, allowing another form of engagement. They even encourage referrals by offering incentives for activity such as engagement on social media. If a loyalty program can reach their customer base on multiple channels, it is allowing them to engage on multiple levels it can work to increase sales while leaving the customer happy and coming back for more.

 

AMC Stubs

One such loyalty program is the AMC movie stubs card. This was originally a pay for loyalty program, which received backlash because of the cost to the customer. AMC listened when customers requested a free program by creating a free program as well. It offers two levels depending on if the user is willing to spend money or not, still allowing those who don’t wish to spend money to engage but offering higher rewards for those who do.

 

Why is it working

The VIP experience does have better rewards, which encourages those in their loyalty program to pay the extra money for higher rewards like skipping the line for tickets and refreshments or more points per dollar spent. It offers a way to not only engage with the company, encouraging social media posts and hashtag use but also offers many different types of rewards creating a multi-channel effect. But it does this without excluding those who don’t feel it necessary to buy into a loyalty program. This shows that engagement with the customer in a positive manner is mutually beneficial for all involved.

 

These are just two examples of bad and good loyalty programs. Their success entirely depended on listening and engaging. Which is something a good loyalty program service can do for your business. For example, Social and Loyal can help to create exactly the right program for you through the multichannel concept.

 

The idea of money being the most motivating reward is growing outdated. As people search for better platforms and new ways to engage now is the time to lead the trend. You can engage on multiple channels and create a new level of interaction with customers. With the focus on the customer and creating an engaging platform, you can grow your business and increase positivity for your company.

 

There are studies that show money is not the best motivating factor to encourage continued use of a product. Psychologist Kou Murayama ran a study that discovered “we may need a more balanced view between extrinsic, short-lived monetary rewards and intrinsic motivation.” By using both and allowing for a connection between receiving rewards and showing that you value the individual you can increase your customer loyalty. Social and Loyal works with the gamification of your loyalty program allowing for the multiple level approach needed to get increase your customer loyalty and grow your own brand.
By growing your own brand we don’t mean just trying something new for a moment and then giving it up. By taking the time to be there when your customers have questions and reaching out when concerns are made known you can work to create new levels of engagement that satisfy your needs as well as your client’s. By satisfying these needs you will be able to grow your customer loyalty ten fold and have a loyalty program that works for you and is what you need it to be.

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Toni Arco
CEO & Head of Growth
Toni, our CEO, is passionate about business growth through technology. He has founded 2 technology companies and spent over 6 years as CTO of digital marketing companies. He spends his time discovering the newest technology and applying trends to our own product and processes. He mentors tech start-ups and teaches courses on growth hacking to share his knowledge.
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