Customer loyalty has forever been an area of focus, no matter the business. Retaining customers costs less than acquiring new ones and loyal customers can be a brand’s biggest marketing machine at a fraction of the cost. Reward points, freebies, elite status, preferential treatment – all facets of the loyalty driving apparatus. In the era of free trials, what are some of the best loyalty programs being leveraged to boost customer retention?

Loyalty programs are in no way a new phenomenon. Betty Crocker launched their box top program in 1929 (coupons printed onto packaging that could be used against future purchases) while some modern loyalty programs date back to the late ‘70s – early ‘80s. United Airlines’ frequent flier program was created in 1972 by Western Direct Marketing with Texas International Airlines and Western Airlines following in the late ‘70s.

The emergence of digital solutions and mobile alternatives has changed the brand-customer bond and any personal interaction that strengthened the relationship. The impact of technology on the business-customer relationship has been two-fold. Brands now have access to far more data than before, allowing them to potentially predict churning customers. Customer data is a goldmine when it comes to identifying which customer wants what, and when. However, customers now too, can compare brands and switch their loyalties at quite literally, the click of a button.

Customer loyalty is now being driven by something larger than points and rewards. Personalization, engagement, convenience and experience take precedence over any other factors that impact customer churn. The dynamic markets of today, influenced by a vibrant technological landscape, are forcing brands to redesign themselves as more relevant to the users of tomorrow. Brands need to be tied into the everyday life of their user, creating an organic stickiness that transforms into loyalty.

Experiences do not necessarily mean what a customer goes through while using a product, but before their purchase and after as well. Customer service is a key influencer when it comes to re-purchasing another product, assuming of course the product is a good one to begin with. Engagement is paramount in sustaining a relationship that the brand has invested in over time, to keep customers returning. Taking customers for granted in the multi-screen and multi-channel era is a grave mistake that can massively impact loyalty.

Personalized interactions, designed for each part of the customer journey, help in building a connection and more importantly, a sense of relatability. This is potentially the hardest part of creating a loyalty inducing interaction, but most rewarding. Convenience is no longer an option; it is a necessity. In order to ensure that every aspect of a customer’s journey is convenient, it is crucial to work in tandem with them. Consistent deliveries of a product or service minimize the variability, making an experience predictable and yet, convenient.

So, what are some successful types of loyalty programs?

Credit cards with combined programs encompassing the air travel, hospitality and retail industries are a very good example of how to generate loyalty by injecting a product into the daily life of a user. The Starbucks app provides both, a mobile ordering feature as well as a mobile wallet that enhance the user experience through convenience without having to ever leave the app itself.

Amazon Prime can be considered as a disguised loyalty program, where customers pay an annual fee to buy most of their products from Amazon. This highlights the importance of perceived value in customer loyalty – in this case, the free two-day delivery. Insert the benefits of “free” Amazon Prime Video, and customers are unlikely to switch providers anytime soon.

Loyalty programs can also be tied into social good, where a portion of customer purchases go towards a charitable cause. This benefits businesses on two levels, as customers are incentivized to purchase not only higher values but more in frequency as well.

In 2010, Vodafone introduced a loyalty program called Bonus Bank, allocating 10% of prepaid top-ups to the ‘Vodafone Bank’, which could be used after 90 days towards subsidized handsets or talk time. Such a loyalty programs tied directly into the aspirations of the user, enabling them to save up towards an upgraded mobile device – often associated with status in certain demographics.

The banking space, arguably most disrupted by technology, is witnessing an emerging gap in loyalty. This gap is largely driven by mobile challengers and digital transformations in incumbents that are just not up to the mark for the customer. Keep an eye out for an upcoming post on how banks can still drive loyalty across their customer base.