manner serves two significant bank highlighted the need to revamp channels is cleaned and formatted traditional reward structures: before it is ready for use. This a critical first step to designing loyalty programs purposes. First, it conveys the that deliver relevant, engaging message that the brand values the we are finding is that when you “What experiences. support of its customers. Second, it reward customers for non-transactional carries the to a behavior like following your brand on brand’s messaging Upgrade Traditional Reward more receptive target audience, since Facebook or Twitter, they start feeling Structures to Recognize Engagement consumers tend to trust word-of-mouth emotionally invested in your brand. and Incentivize Advocacy. Traditional recommendations from people they They start feeling like you understand reward structures must be upgraded. know, more than they trust traditional who they are, how they see the world, They need to ensure that customers advertising21. and how they express themselves. are recognized and rewarded not only This emotional investment is key to for completing transactions but also driving loyalty in the long term.” for engaging and interacting with the Loyalty programs brand in other meaningful ways. Reward mechanisms should recognize should clearly customers for brand advocacy on In order to have a communicate the types social media, for sharing feedback and meaningful dialogue writing reviews, and for participating in of data they collect and game-based campaigns. Luxury with their most how the data is used. cosmetics brand Lancôme’s Elite valuable customers, Rewards loyalty program, for instance, organizations need to strongly incentivizes brand advocacy. In looking beyond transactions and While members receive 10 points for understand the context providing more avenues for consumers every dollar that they spend on to earn rewards, loyalty programs will of their needs and Lancôme merchandise, they receive also be addressing a key consumer up to 25 points for sharing Lancôme’s behaviors. pain point the long lead times for the – product posts on their Facebook, accumulation of points. The Head of Instagram, and Twitter pages20. Loyalty and Rewards at a leading Incentivizing brand advocacy in this Figure 7: Customer Needs and their Impact on Loyalty Program Design
channels is cleaned and formatted before it is ready for use. This a critical first step to designing loyalty programs that deliver relevant, engaging experiences. Upgrade Traditional Reward Structures to Recognize Engagement and Incentivize Advocacy. Traditional reward structures must be upgraded. They need to ensure that customers are recognized and rewarded not only for completing transactions but also for engaging and interacting with the brand in other meaningful ways. Reward mechanisms should recognize customers for brand advocacy on social media, for sharing feedback and writing reviews, and for participating in game-based campaigns. Luxury cosmetics brand Lancôme’s Elite Rewards loyalty program, for instance, strongly incentivizes brand advocacy. While members receive 10 points for every dollar that they spend on Lancôme merchandise, they receive up to 25 points for sharing Lancôme’s product posts on their Facebook, Instagram, and Twitter pages20. Incentivizing brand advocacy in this manner serves two significant purposes. First, it conveys the message that the brand values the support of its customers. Second, it carries the brand’s messaging to a more receptive target audience, since consumers tend to trust word-of-mouth recommendations from people they know, more than they trust traditional advertising21. Loyalty programs should clearly communicate the types of data they collect and how the data is used. In looking beyond transactions and providing more avenues for consumers to earn rewards, loyalty programs will also be addressing a key consumer pain point – the long lead times for the accumulation of points. The Head of Loyalty and Rewards at a leading bank highlighted the need to revamp traditional reward structures: “What we are finding is that when you reward customers for non-transactional behavior like following your brand on Facebook or Twitter, they start feeling emotionally invested in your brand. They start feeling like you understand who they are, how they see the world, and how they express themselves. This emotional investment is key to driving loyalty in the long term.” In order to have a meaningful dialogue with their most valuable customers, organizations need to understand the context of their needs and behaviors. Figure 7: Customer Needs and their Impact on Loyalty Program Design