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Developing and implementing a successful Loyalty Marketing program can be challenging for both marketers and consumers alike. Americans accumulate some $48 billion in loyalty rewards annually, yet $16 billion — or, one-third of those rewards — go unredeemed according to new research from Swift Exchange and COLLOQUY. In other words, the average U.S. household active in loyalty programs earns back $622 per year and does not collect $205 of said rewards. Talk about waste — for consumers and brands. While explanations for these losses range from consumers finding point and/or reward redemption confusing and/or difficult to consumers not realizing the rewards are out there for the taking, one thing is certain: lack of redemption does not signal a lack of participation. Loyalty programs remain popular and they’re growing like never before. In the United States, loyalty memberships currently exceed 2.1 billion, up from 1.8 billion in 2009. The challenge marketers face is to build loyalty programs that will excite consumers by being relevant and viable.
Maybe I’m just blogging out loud, but it seems like growing loyalty is a lot like growing a brand; consistency, honesty and — above all — sincerity are key to establishing success. A little creativity doesn’t hurt, either.
While unredeemed rewards might not sound discouraging, the COLLOQUY report argues they are bad business for marketers. Unredeemed points/rewards might sound like a shortcut to corporate savings, but they undermine efforts to build long-term customer relationships. “If redemption equals engagement and engagement delivers customer satisfaction and profits, then loyalty marketers should encourage their members to make the most of their rewards,” says Kelly Hlavinka, a managing partner at COLLOQUY. “In short,” she argues, “redemption is good.” And why wouldn’t it be? As we often discuss at Vertical Marketing Network, rewards are meant to be just that, and marketers should want consumers to participate in their programs by signing on, cashing in and — ultimately — spreading the word. One campaign that does just that is WeReward, a location-based mobile app for Android phones that allows users to earn actual dollars by checking in to businesses. But realizing your marketing goals need not be fussy. With consumers absorbing thousands of marketing pitches per day — not to mention the ever-growing number of ways to engage said consumers — marketers owe it to their brands and most-valued patrons to offer rewards that work. Four points to consider:
1. Identify — What are the demographics of your most-loyal consumers, and what kind of rewards will ignite their brand passion? There’s no denying the value of an existing consumer, and research proves it costs businesses 6 to 7 times more to acquire new ones. Knowing who’s loyal to your brand is an important first step.
2. Inspire — Is there an opportunity for you to get creative? To really shake things up? A good surprise is worth its weight in gold. Marketers, don’t be afraid to dazzle and delight. Aside from showing appreciation, loyalty programs are an opportunity to make consumers feel special.
3. Imagine — Is the reward consistent with your brand image? Does it resonate well? Marketing is not without pitfalls, and the wrong message could send consumers — even loyal ones — seeking alternatives.
4. Inquire — After your plan is in place, how can you follow-up with members to ensure they’re getting the most from you, and thus you’re getting the most from them? Social media is an especially great tool for this; something as simple as a Facebook post or tweet reminding loyal consumers of the value of your program takes seconds.
Effective loyalty marketing is good for both brands and consumers. Making your customers feel appreciated, understood and liked will reward your brand.
It also makes that consumer rat race a little less scary.