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Do rewards really create loyalty?

Simple answer, yes! A rewards program really can create loyalty but it’s all about doing it right. When used correctly reward programs can be fonts of insight and huge revenue generators. Used badly they become an inescapable cost of doing business, turning into an anchor.

First, our definition of a rewards program. A customer rewards program or loyalty program is a customer development strategy that uses incentives to motivate customers to buy from you. It can form part of new customer acquisition, retention or reactivation.

In order to genuinely create loyalty your reward program should be set up as part of a wider customer centric strategy. It needs to be about continual education and motivation.

Short term promotional giveaways can create interest for new customers or motivate existing ones to try a service or product but if not designed in the right way to build loyalty they’ll be temporary blips on a graph and only provide a small amount of their potential returns.

Everything comes back to being customer driven. Your targeting needs to be realistic, based on the customer (segmentation helps), not a one size fits all approach. Especially as closing ineffective program can create a PR nightmare and leave a huge amount of cost exposure without a hope of recovering the money spent. It’s safe to say that it’s all in the planning and execution.

Customer engagement should be at the centre of your strategy.

In a world where everything seems to be available to compare at the touch of a button you need to be considering what exactly it is that will keep your customers coming back to you. Ensuring that rewards are personalised and relevant is the key to this. How many times have you ignored something that means nothing to you? The answer is probably “I don’t know, I can’t remember” which is exactly the point! If you aren’t relevant, you are nothing.

Loyalty is fundamentally an emotional concept, it comes from how we feel about something, so to create a successful reward scheme that garners loyalty you need to build a strong and positive relationship between your customer and your brand.

In a commercial world, loyalty is about repeat purchases. The more someone comes back, the more you make. So, if you think about loyalty as a customer coming back, back and back again, without the lovely fuzzy feeling that some people have with Apple, BMW or Yorkshire Tea, what you need to do is make yourself the default choice. Service, availability, price and delivery are all central to this, but rewards can help too. They give customers something to aim for and they form part of building habits. The same habits that make you a default choice.

Making your customers feel valued through targeted rewards, relevant communications and customised experiences really can and does create loyalty.


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