How Companies Can Elevate Their Loyalty Programs To Generate Revenue


Brand loyalty has become more important than ever after the pandemic led to shoppers trying new brands and shifted many customer behaviors. And customer loyalty programs are changing to reflect this shift.

Mastercard released a report on customer loyalty and engagement in the COVID era outlining four ways retail marketers can re-calibrate their loyalty programs.

A Shift In Consumer Behavior

Customers have revised what they consider a satisfying user experience, reduced their engagement levels, switched their loyalty to new brands, and changed their lifestyles significantly due to the pandemic. All of these changes had a ripple effect that caused companies to reassess what customer loyalty means and how to obtain it.

Previously majority of loyalty programs worked similarly – rewarding customers for being repeat customers and spending more. But now things have changed. The report states that, “Today, forward-thinking retailers take a more strategic view and are developing programs designed to motivate brand loyalty using customer retention, not purchase frequency, as the key metric to optimize. This change was in the wind even before the pandemic, as businesses began to recognize the importance of building dynamic relationships that extend far beyond the transaction.”

It’s Now Tougher To Gain Loyalty With Customers

Brands should focus on creating deeper connections with customers, going beyond simply offering good service. The report found that 74% of consumers are more likely to buy from brands that demonstrated concern and provided excellent care for customers during the pandemic – proving that customers today are expecting much more from brands.

And brands have been struggling to figure out how to gain customer loyalty in the current climate. In fact, 49% of companies say keeping customers loyal over long periods of time is their top loyalty program hurdle.

Know Your Target Audience

At at transient time for shoppers, it’s critical for brands to be on point in their communication and delivery. And it’s critical to be asking questions, listening to the consumer, and be prepared to change.

The report found that of 1,800 business executives who were asked what improvements they made to their customer experience during the pandemic, the top answer they received was more frequent communications to customers. Unfortunately, 10,000+ consumers queried during the same research felt differently. They said that frequent communications from companies was the last thing they wanted during the pandemic – proving that what marketers think consumers will respond positively to, isn’t always the case. This is why it’s so important to simply ask questions and have an open line of communication with potential customers – whether that be through surveys, intel from in-store visits, through social media, or customer service centers. In whichever manner works for your company, solicit feedback directly and show genuine interest in making changes to cater to the customer.

Social Commerce Is Changing How Consumers Interact With Brands

Social commerce grew significantly during the pandemic. In 2021, $37 billion in goods and services were purchased through social-commerce channels. Globally, the social-commerce market is expected to grow to more than $2 trillion by 2025.

Customers are clearly gravitating towards this integration of e-commerce and social media. They are enjoying combining the ease of online shopping with the community aspect that social networks provide. Experientially, social commerce is the closest thing we currently have to recreating the experience of shopping with friends in brick-and-mortar stores, but in the digital world. Social commerce is changing where, when, and how consumers shop today.

In 2022, U.S. social commerce sales are expected to reach $45.74 billion, with more than a half of the country’s adults making a purchase on social media.

With the knowledge of how customers are influenced by social media and the amount of time they spend on these apps, brands can add elements of social to their loyalty programs. This can be executed in many ways whether it be as simple as rewarding for Facebook or Instagram follows, or more complex solutions such as gamifying aspects of social programs. The Mastercard report stated this, “Integrating gamified rewards with social media can be an especially potent way to nurture consumer loyalty in the COVID era.” Rewards can be structured in levels and points achieved during gaming, which customers can then use to make purchases – these strategies have tremendous emotional appeal with users.

A report by Colloquy found that, “Programs that reward for Instagram follows have an average redemption rate that is 7.76% higher than the average across all stores. The redemption rate for programs that reward for a Facebook like are 12.26% higher, and programs that reward for a Twitter follow are 16.39% higher.”

Look To Data For Solutions

Customer data should be analyzed to take existing loyalty programs to the next level. Through micro-segmentation brands can identify consumers based on an endless list of traits, whether that be financial status, spending habits, risk profile, personality type, or any other set of values that would be beneficial to look at. This information can then be utilized to cater to customers through targeted and relevant rewards, offers and communications.

The entire customer loyalty management market worldwide is valued at more than $5.5 billion U.S. dollars and it is expected to surpass $24 billion by the end of 2028 – making it a critical strategy for companies to focus on.

Loyalty programs drive customer retention and encourage repeat business, which in turn helps companies generate revenue, increase referrals, and achieve overall growth.

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