4 Ideas to Improve Customer Loyalty Programs in 2023

What sets the best loyalty and rewards programs apart from the rest? For retailers, it is not enough to simply have a program in place. According to brand loyalty experts, an average consumer belongs to about 15 different programs, but is active in less than half of them.

With participation high and engagement low, it is essential to continually evolve your retail loyalty program. You need creative thinking and a clear strategy to elevate your program to meet buyers’ changing expectations while maximizing returns for your business as well.

4 Ideas to Improve Customer Loyalty Programs in 2023

1. Advance personalization with robust omnichannel features

The most effective loyalty and rewards programs focus on reducing friction throughout the entire customer lifecycle. Omnichannel delivery – or providing customers with a seamless rewards program experience across online, mobile, and brick-and mortar stores – continues to be a key strategy to drive customer loyalty.

Looking forward, you can evolve your omnichannel rewards strategies to build a more personalized relationship with customers. You can set your brand apart by approaching “personalization” as more than addressing the customer by name and offering product recommendations. Rather, think about expanding the omnichannel features of your rewards programs such as:

• Making loyalty signups available across channels including at the register, on the website, and through the mobile app. Customers can select their preferred method of communication and check their status across channels with a single action.

• Offering a range of easy ways to earn and redeem rewards such as traditional spend-based rewards or more innovative approaches such as gamification or social media sharing. When customers are ready to redeem their rewards, aim to minimize hassle by making redemption available online, through an app, or in-store.
• Engaging customers post-rewards redemption by offering product support or other follow-up communication, such as offering them the ability to write a review or tips on how to get the most out of their rewards.

The goal of an integrated omnichannel rewards delivery program is to build customer retention through a consistent experience across channels. By evolving omnichannel features, you can build a more robust relationship with your customers. Additionally, you can test out different messages and strategies across channels to define the most effective approach. Finally, omnichannel delivery of customer loyalty programs allows you to gather accurate, real-time customer activity data and form actionable insights.

2. Deepen emotional connections with experiential rewards

With experiential rewards, brands offer unique experiences that go beyond traditional rewards such as discounts or cash back. Experiential rewards offer a powerful way to connect emotionally with customers, which encourages engagement and social sharing.

Rethink your loyalty program rewards beyond discounts and products to offer your customers an experience. For example, coffee chain Starbucks offers members free birthday beverages, exclusive member events, and early access to new products. Sephora, the beauty product retailer, offers beauty classes, one-on-one makeup consultations, and exclusive access to product launches.

Think about your brand’s differentiators. Why do customers choose your business over competitors? What expertise can you share? Then highlight those differentiators within a memorable, unique experience to demonstrate your understanding of customers’ interests and needs. This could be as simple as early access to a sale, member events, or free service like jewelry cleaning.

A thoughtful experiential reward strengthens the customer relationship and increases engagement by fostering a sense of community. Some experts go on to argue that emotional connection is the key ingredient to brand success. According to a predictive emotional intelligence study, customers with an emotional relationship with a brand have a 306% higher customer lifetime value (CLV) and are 71% more likely to recommend the brand to others. Loyal customers with a positive experience also help build awareness by advocating the brand to others.

3. Align with customers’ values through mission-driven rewards

Like experiential rewards, you can connect more deeply with customers with mission-driven rewards. These rewards go beyond building stronger emotional connections, but also demonstrate that your brand’s values are in alignment with your customers’ and that you are committed to making a positive impact on society.

These programs can involve allowing a customer to donate accumulated points to a nonprofit. At Stop n’ Shop grocery stores, for instance, customers can choose to donate points to a local food bank. Meanwhile, the outdoor clothing brand Patagonia offers a program that allows customers to earn rewards when taking action to support environmental causes such as climate change, biodiversity, and environmental justice. Mission-driven rewards can be further personalized to the individual customer by offering them options that are tailored to their interests.

Customers are becoming more sophisticated in their expectations for social responsibility, which requires brands to demonstrate the impact of their mission-driven rewards to further build trust.

4. Increase rewards value with strategic partnerships

Instead of limiting rewards to your own customer base, you can explore strategic partnerships where your company shares loyalty program access with other companies.

This could be as straightforward as allowing rewards redemption for products or experiences from partner retailers. Or, you can consider a more creative approach to a shared loyalty program as a method for differentiation.  For example, Delta Airlines and vacation rental broker Airbnb partnered to offer customers airline miles for their Airbnb stays. This allowed Delta to reward its members and provided Airbnb access to a new customer base. Starbucks and rideshare app Lyft partnered to offer Lyft riders points that they could redeem for free food and drinks at Starbucks.

By partnering with other brands, you can offer customers a wider range of rewards and benefits to improve customer satisfaction. Further advantages to strategic partnerships include enhanced reputation when partnering with well-known brands, access to new customer segments, and improved insights at reduced costs by sharing data across companies.

Bring your loyalty program vision to life with Clutch

A strategic, results-driven loyalty program doesn’t happen in a vacuum. While an effective, high-performing loyalty program requires an investment of resources, success in this area is worth the cost. According to Accenture Interactive research:

Retailers’ customer loyalty program members generate up to 18% more revenue for retailers than do customers who are not loyalty program members.

A high-performing loyalty program should reflect the brand and its customers. Since 2012, Clutch has worked with hundreds of brands to bring their visions to life: delighting customers by providing a loyalty program that aligns with their interests, values, and experiences.

We can help you create and execute a program that is right for your business and customers.

1. https://cdn2.hubspot.net/hubfs/352767/TLR%202019/Bond_US%20TLR19%20Exec%20Summary%20Launch%20Edition.pdf
2. https://martechseries.com/sales-marketing/customer-experience-management/motistas-study-results-conclude-emotional-connection-key-brand-success/#:~:text=The%20report%20concludes%20that%20customers,customers%20that%20are%20merely%20satisfied.
3. https://newsroom.accenture.com/news/members-of-customer-loyalty-programs-generate-significantly-more-revenue-for-retailers-than-do-non-members-accenture-research-finds.html

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