EAST — four simple ways to improve your loyalty program
It is safe to say that most loyalty programs fail to live up to the expectations of the consumer. With terrible entry barriers to sign up, appalling & convoluted benefits, and even more convoluted means to reap them, the state of loyalty programs so far has been a mess. Only a few are really bringing in loyalty to their respective brands.
EAST
If you want to improve the usage of your loyalty program, you have to make it Easy, Attractive, Social and Timely (EAST). Here are the key tenets of EAST:
Make it Easy to use
- Easy to enter — make signing up as easy as clicking a button. Use previously known information to prefill the forms
- Simplify the mechanics — earning of rewards, spending of rewards, utilizing benefits
Make it Attractive:
- Attract attention — the program should attract the attention of the non-members
- Rewards should be tangible — Monetary benefits, clearly marked privileges etc. are key
Make it Social:
- Encourage sharing — allow for sharing of rewards
- Reward sharing — reward users who bring more users
Make it Timely:
- Relevant — Prompt people when they’re most likely to engage, using data to understand when people are most likely to engage with your program and target them there.
- Nudge at the right time, right place — effectively use program data to get the right response.
Let’s look at them in detail.
Easy to use
Easy to enter
Majority of the loyalty programs fall flat when it comes to ease of signing up. Most of the times, in stores, you’ve to fill up a long tedious form or fill up a big online form, with fields inquiring about your childrens’ age. This is not only tedious, but also off-putting. Here are the fields you’ll ever need in your loyalty program: Email, Phone number, Name & Gender (some may add date of birth, but it’s better to get an age-range). No more, no less. Anything more will reduce your sign up drastically. .
For every other field, incentivize. People are willing to trade information for benefit — the more beneficial the program is for them, the more likely they are to give you more information.
There is no need to start segmentation from day 1. You can start segmentation when you have over 10k users and around 40k transactions.
What can you do better?
The simplest iteration of in-store sign up is to get the cashier to fill up the details on the POS. Taking only the phone number and the name, the user can be pushed into the loyalty program. The cashier can then enter information like gender and approximate age-group without troubling the user for information. Follow up with an SMS with a link to complete the sign up, and you have a easy to enter loyalty program.
For ecommerce sites, it’s far more simple — at the time of checkout, a simple option of sign up for loyalty program gets you all the information you need — even for guest checkout. You can checkout the implementation on kiabi.ae. Make phone number (for omni-channel loyalty programs) or email (for online only loyalty programs) your primary customer identifier.
Simplify the mechanics
Most programs have made it easy to earn rewards. Most don’t rely on a physical or digital card to utilize earning. One key example is of Shukran, a loyalty program in the GCC, moving away from physical and digital cards to a phone number. You can provide your phone number to identify your membership and earn points.
Where they fall flat is when it comes to utilizing the benefits/rewards. The risk to convenience ratio is too low for a convoluted process of providing identification and carrying a physical card. Linking of your loyalty program to your online account shouldn’t have to be by calling a customer support number! True, there are challenges of exploitation, but make sure your benefits outweigh the effort required to utilize the benefit.
An example of a silly convoluted mechanics is the Privileges Club in the GCC. The reward mechanism is an entry into a lucky draw once a month. That’s a non-benefit. You’d rather buy a lottery ticket. To get to know your current draw status, you have to go their website, log-in, complete your profile and may be, just may be, you’ll get to know if your entries are in this months draw or not.
In contrast, Sephora’s Loyalty program provides a quick benefit — customers who spend a certain amount are eligible for an instant gift. The perceived value of the gift goes up as the spends get higher. It’s simple, from a customers mind — they spend more, they get more.
Attractive
Attract attention
FOMO is a really powerful motivator. If your program isn’t making those without the program feel left out, you’re not getting anywhere.
It doesn’t have to be a VIP service — simple things like a dedicated checkout counter (as was done by Shukran in Bahrain, leading to an increase of 80% in their sign-ups) or a site UI modification to indicate the users current loyalty status, go a long way to improve loyalty.
What can you better?
Add swag. People love to show off their exclusive Sephora Black card or their Robinsons Black Diamond card. While this may not directly increase your signups, it will increase the users lifetime value (CLTV) with your brand.
Tangible rewards
Despite the evidence that reward points, as stand-in for currency, work psychologically to present a bigger earning value than what it actually is, I am of the opinion that points are a nuisance. If your program provides direct currency as discounts, you’re adding a layer of unwanted complexity to your program. Sure, a 10000 points value looks better than a USD100, but when it comes to actual benefit utilization, it’s a disappointment.
E.g., I have over 180,000 points in my banks loyalty program. What does that translate to? Only AED 1000! This leaves me disappointed, since the multiplier is a very odd 180! This creates a negative impression in my head — a sense of deception at play, in my spends vs earning. Am I being given what I was promised? Is it worth spending so much here? The answer is a vehement no, despite the fact that from a credit card loyalty stand point, a return rate of .5% makes financial sense (infact, is more generous than most).
What can you do better?
A lot. Simplify the mechanics — be honest. It’s easy to say you get 2% of the transaction back or you’ve earned USD 10 for your spends of USD 500. However, if financially your return rate doesn’t make user sense, add actual benefits in store — like free gift wrapping, special counters during peak hours, random free gifts over a certain amount of purchase.
One example of this is with small vendors — perfume selling pop up shops in the malls, here in Dubai, will offer a free room freshener after the transaction is completed. The experience is exhilarating — after bargaining over a bundle, getting an additional item (no matter the value), goes to make you feel victorious in the bargain, sometimes even going to show the honesty of the salesperson. This guarantees repeat sales.
Social
Encourage sharing
Sharing is an essential part of the new generation. We share everything — benefits, Netflix account, Prime memberships. Why can’t we share the loyalty benefits we get with our loved ones? This is precisely what is missing — somehow, we’ve created a notion that benefits should be locked down to a specific user. If the ultimate goal of a loyalty program is to increase sales, why stop those who are willing to spend?
A great example of this, is the way Amazon and Netflix allow for sharing of account. What’s the benefit, you ask? Simple — the more people hooked on to their content, the more difficult it is for them to move out to other streaming platform.
Sharing can also mean sharing to the world that you’ve upgraded your tier. While there is more to do with the brands perception (high end luxury retailers will have a better upgrade to share ratio), there is some benefit in allowing social media engagement with the users community.
What can you do better?
Enable gifting of benefits. Allow members to gift their benefits to another member. It could be just the points, getting a member a nudge to the next loyalty tier, or even extending a coupon to their friends. Only, ensure that the gifted party is a member.
Restricting only increases inconvenience — users will find a way around the tightest of your SOP.
Reward sharing
If your points do not directly translate to monetary benefits, you have the option of rewarding shares. Esther’s VIP Rewards, a loyalty program from Australia, has done just that — a user gets 500 points for referring other users and 50 points for every share. The benefits are tremendous — you can gamify this, building a community around the users connected by more than just your brand. Remember that a user referred by your loyal member is more connected to the user than you, and hence is more likely to listen to the member than you. Incentivize both and cherish the connection.
What can you do better?
Award points for referrals. Build a community around your program. Talk about more than your brand — support the main causes your members support. Going beyond the transactional nature of your relationship — translating the users needs by building a community — can be a good way to ensure lifelong loyalty.
Timely
Relevant
A day before the weekend, there is a rush by the retailers & their loyalty programs to be relevant in your inbox. A constant barrage of emails and SMSs clog my inbox pipeline. Funny thing is, you aren’t thinking about shopping one day before the weekend. You are thinking of shopping later in the evening or the next day. E.g. I shop in the morning, usually around 10–12. Were I to get a message from any of the loyalty programs I’ve signed up to, with an offer relevant to me, I would gladly go out of my way to checkout the offer, if not outright shop at that store.
Relevancy is built over time, but don’t let the data and the technology guys fool you. You can set up an automated job to send mails/SMSs to customers based off a handful transaction data points — the trick is not to cover the entire dataset, but only a handful of those most likely to purchase.
What can you do better?
Send relevant communication at the right time. E.g. don’t send a profile update information request during peak shopping hours of the customer. It’s better to send that request in the middle of the week or a day after the shopping is done. This is to allow the customer to justify internally the sharing of additional information.
Nudge
Nudging is a very important trait in loyalty program. It can be used to improve engagement, improve response and in some cases, improve sales. Nudging relies on basic human tendencies to improve the outcome.
One simple example is what Club Apparel, a loyalty program in the UAE, does — it uses the principles of ‘Reciprocity’ and ‘Scarcity’ — to get additional information and sales. When you sign up with basic information, it allows you to earn points. Those points are on a timer — expiring after a fixed time — creating scarcity, forcing you to spend again at their store. Now, if you don’t use those points, you can extend the points validity, one time, by providing additional information (like Nationality and Date of birth) — using the principle of reciprocity — you get more time to spend those points, with a trade off of information.
The focus has to be on immediate/short-term benefits. Long term benefits in this day and age of transient loyalty are hard to justify.
What can you do better?
Reciprocity & Scarcity work really well when it comes to loyalty programs. Marry that with the timing of your communication and you should have higher returns.
Caveats
Safe to say that most of the posts I write come with a caveat and this one is no different. Loyalty comes down to your individual interaction with the user. If you are able to give a relevant experience, with little or no friction, you’re already winning at the game. Programs like Sephora, Amazon Prime, Starbucks rewards rely on a 5 star one-on-one experience with the brand to build the groundwork for their program success. If your retail/digital experience has glaring customer experience holes, no technology/marketing/psychology methods can bring loyalty to your brand(s).
You can buy sales, but not loyalty.
This has been a long post, and if you’ve made it this far, thank you. I’m in the process of designing a loyalty program for retailers in the GCC. This post came about when I was thinking about the core tenets of the program.
The idea is to create a set of guiding principles for loyalty programs that span all factors — from user experience to financial commitments, along with a projection of potential usage and engagement. If you’re in Dubai and would like to help me with this or just share ideas, please reach out to me on Linkedin. I will be more than happy to get your help on this :)
Thank you for reading!