How to Make Your Loyalty Program Addictive
If you’ve read anything about loyalty programs lately, you know that the transactional loyalty program is dead. Points-for-purchase on its own just isn't a sustainable way to create lasting brand loyalty.
You probably also know that creating an emotional connection with consumers means aiming for brand admiration -- not just more sales.
But there's a risk to forgoing a focus on sales completely.
Don't get me wrong, emotions are important. Studies have shown that customers who feel an emotional attachment to brands stay loyal for longer and are more forgiving if the brand makes a misstep.
But that doesn’t mean you shouldn't prompt your customers to use your loyalty program repetitively.
In fact, it’s critical you do so.
After all, you have to get them to stick around long enough to form that emotional attachment.
Why You Need to Create Habits in Your Program
Research has shown that consumers are only active participants in about half of the loyalty programs they sign up for (1). And since engaged customers buy 90 percent more frequently and spend 60 percent more per transaction, you definitely want to make sure your program is one of the ones they engage with (2).
How do you go about making sure customers engage with your program?
You make using it a habit.
Traditional loyalty programs use a transactional reward structure to encourage members to buy more products. They bank on customers wanting a few bucks off their next purchase SO MUCH that they’ll continue to buy more and more. Think of your local sandwich shop’s “buy 10 get 1 free” program, and you get my drift.
There are some major flaws with this system.
For starters, this isn’t a great way to form emotional connections with customers. These types of systems make it extremely obvious the only thing your brand cares about is sales. And secondly, there’s nothing in it for members to engage, other than the promise of a free product sometime down the line. Because there’s no urgency and no reward for engaging, most of the time members just don’t.
On the other hand, a loyalty program that’s focused on customers will reward members for doing anything that benefits the brand: from making purchases, to referring friends, to engaging with promotions.
Instead of relying just on points to prompt engagement, they build habits of engagement right into their program. They give customers a reason to come back every day and reward them for doing so.
Customers want to engage with the program -- because there’s an immediate and time sensitive reason to do so.
As customers continue to return, engaging with the program becomes a habit. Those habits of engagement not only drive brand advocacy and loyalty -- they increase purchase frequency and basket size.
5 Ways to Get People Hooked on Your Loyalty Program
Research has shown that it takes an average of 66 days for an activity to become a habit. But that amount of time can vary substantially depending on the person -- taking anywhere from 18-254 days (3).
As a loyalty marketer, that means you need to provide onboarding and continual re-targeting to loyalty members to prompt habit forming in your program.
You can’t stop at acquisition.
Here are 5 strategies for building habits into your program.
1. Reward for Engagement, Not Just Purchases
If you want customers to engage with your program on a regular basis, you need to give them a reason to do so. It should be rewarding every time they interact with your program. Not just when they’ve finally bought enough of your sandwiches to get one free.
Reward customers for logging onto your loyalty program every day and completing actions, like filling out profile information, making purchases, or loading coupons.
For example, let’s say you’ve hooked your digital coupons up to your loyalty program. (You smart marketer you!)
To build a habit of coupon loading, think of the rewards like badges. If a customer loads one coupon, they earn 1 point. If they load coupons 2 weeks in a row, they earn 5. If they load coupons every week for a month they earn 20, etc.
Customers have to load coupons consistently in order to earn the reward. Suddenly that’s a real habit you’ve engendered. And if you reward for redeeming coupons as well as loading them, you can genuinely increase the profits of your brand.
2. Create a Reward Structure
The same way you can reward for loading coupons, you can reward for purchases. This is probably the most common way companies try to build habits into their program.
Essentially the idea is to structure your rewards so that the more a member uses the program, the bigger their reward will be.
For example, you see a lot of programs that use a “bronze, silver, gold, platinum” level structure to their rewards. Members unlock additional rewards by advancing to the next reward level.
In a basic program, that reward might just be more points. But you can also unlock exclusive member experiences -- like member only events or perks that have a real world value outside of discounts.
Sticking with my sandwich shop example (I know, it’s terrible... I must be hungry), let’s say you have a platinum level for your top sandwich loving customers. Instead of just continually offering them bigger discounts (which eats into your bottom line) why not offer them exclusive member only tastings of unreleased sandwiches? You get their input (which is valuable market research) and you give them an exclusive experience that makes them feel valuable, reinforcing their emotional attachment to your brand.
It’s easy to translate this idea for other product categories as well. Grocery stores could offer exclusive recipes based on shopping patterns. Clothing retailers could offer a personal in-store consultation. Restaurants could offer a “members only” themed night. The possibilities are endless -- you just need to find an experience that your members would value and that aligns well with your brand.
3. Post Codes on Social
You have an audience on social, so why not promote your loyalty program? Post codewords that members can redeem for extra points to create a habit of checking your brand’s social pages every day.
Since consumers will then need to log into your loyalty program to redeem their codewords, they’ll also end up engaging with your program every day. The trick is to use other features within your loyalty program, like personalized offers and coupons, to get them to further engage with the program once they’ve logged in.
For even more impact, create codewords that “reveal” a special offer as well as rewarding points. The desire to know what the offer is gives members an extra incentive to redeem your code -- and can prompt them to use the coupon if they like what the product is.
Just make sure your offer is valuable and something that non-members wouldn’t have access to. For example, a coupon for a product that rarely goes on sale.
4. Create Daily Featured Products
Along the same lines as a “mystery offer,” daily featured products can be a great way to prompt repetitive engagement with your loyalty program -- especially if you personalize them.
You can use member’s past shopping history, their browsing history, or information you’ve gleaned from product recommendation quizzes to feature specific products as a “daily featured product.” These recommendations could be shown on your program hub, or emailed out to your members. For extra impact offer a limited time exclusive discount on these products to members.
This gives members a reason to engage with your program each day. It appeals to both curiosity and bargain hunting: “I want to see what they think I’d like, and if I do like it, get a deal on it.”
Featuring specific products is not only an effective way to boost purchase frequency -- it’s also incredibly valuable for your CPG partners. You can bet they’ll want their products to be featured over their competition -- and they’ll kick in cash to make sure they are.
5. Gamified Sweepstakes
Gamified sweepstakes are the ultimate way to drive a huge uptick in engagement in a very short amount of time. You can use all the aforementioned tactics for habit forming within a gamified promotion, and run it periodically throughout the year to stimulate engagement.
Here’s why it works so well: the game is a reward for members in and of itself. The promise of a fun game will draw more people in, and when designed well makes them want to keep playing. And by limiting game plays, you can prompt them to complete actions like loading coupons, making purchases, or referring friends in order to earn extra game plays.
The fun factor (and the prize) will motivate them to engage repeatedly. And that helps turn using your program into a habit.
The Bottom Line
To create loyal customers you do need to build an emotional connection. But first you have to get members to stick around long enough to form that attachment.
Give customers a reason to engage with your program each day. Reward them for doing so. Offer them extra points, exclusive experiences, or product recommendations. Turn using your program into a habit. And run gamified sweepstakes periodically throughout the year to jumpstart engagement rates.
Then after you’ve built habits into your program and members are engaging repetitively, you can add features that deepen that emotional connection and turn your loyal shoppers into brand advocates.