Loyalty schemes – Mind the gap!

Mind the gap between loyalty programs and marketing

Customer loyalty schemes are everywhere, from major retailers to small local stores, pharmacies to gyms. They give the impression that companies wish to get to know their customers and to offer them something they actually want. Successful schemes utilise customer information to do just that. However, there are many loyalty programmes that fall short. Ever received a discount for a product you never buy or a pet you don’t have?

It’s not only disappointing it makes you wonder why you even bothered to sign up. This lack of personal connection leaves a bad taste in the mouth, which is counterproductive to the purpose of these programmes.

So where’s the gap?

Whilst these schemes open up vast quantities of consumer data, what happens with that information depends on a company’s ability to integrate and analyse it in a meaningful way. If you’re running on legacy tech, this can put unwanted strain on your operating capacity making this analysis a much lower priority. For companies with the capability, there’s often a disconnect between valuable insights from loyalty and consumer interaction data and those who need to use it. This results in, for example, generic digital marketing campaigns instead of personalised, targeted contact.

Loyalty schemes

Loyalty schemes are mainly used to build brand loyalty, engage and retain consumers and ensure increased revenue through repeat business. Other benefits include attracting new customers through sign up points or initial discounts, showing appreciation for their allegiance and improving communication. Of course, these programmes also generate a wealth of consumer data and the opportunity to measure loyalty through their engagement.

To this end, there are a variety of structures to choose from and what you select depends on how your business operates. Here are some of the options:

  • Points programmes offer points per set amount spent that translate into discounts, cash back, ‘e’money or rewards.
  • Tiered systems give better benefits with increased spend, conveying exclusivity and status on higher value consumers.
  • Subscription programmes operate on a regular amount paid for a set product (e.g. coffee beans, water cooler bottles) or an agreed upon service (e.g. professional consultations, number of manicures, classes or personal training sessions) over a designated period of time. Discounts are offered when signing up for longer terms, e.g. 12 months. The consumer benefits of ease and convenience translate into higher ongoing value for the company.
  • Community based schemes provide a forum for members to interact with other like-minded people and build a brand community. They can chat, share photos, follow brand-related topics and sign up for exclusive events. This programme provides companies with access to consumer insights and information for product or service development and improvement as well as an avenue for conversion optimisation.
  • Charity based programmes allow rewards to be donated to appointed charities and are founded on common values such as animal welfare or the environment. This creates a deeper connection with customers and strengthens the company-consumer relationship.

Many companies offer a combination of these schemes to appeal to a broader consumer base and maximise incentives. Related loyalty apps, e.g. Nike’s training apps that help members achieve their exercise goals, or those that allow customers to manage their account, redeem rewards and so on can engage customers further and create bonding through ongoing contact or shared progress.

No more gaps!

From the moment it is up and running your loyalty scheme is generating data. Early programmes only noted amount spent to translate into rewards. These days every detail can be logged from amount spent per item to time of purchase and location. This data creates purchasing patterns that enable you to personalise incentives, up sell, cross sell and maximise your customer experience and value. Of course, it also helps with “silent complainers” and predicting churn.

However, if this information doesn’t reach the appropriate departments then Customer Service, Sales and Marketing are operating blind when communicating with consumers. Digital marketing, even dynamic digital marketing, can monitor customer touch-points but are not actually tracking loyalty purchases and patterns. This results in financial losses and lower ROI due to “spray and pray” marketing campaigns, dissatisfied customers and higher churn rates.

Next-gen solutions put an end to all of this. Locstat’s Customer Data Platform (CDP) uses graph database technology, Complex Event Processing and Graph Machine Learning (ML) to identify patterns then contextualise and enrich insights. This tangible customer intelligence enables data-driven recommendations to be disseminated to the relevant department for strategic or tactical campaigns.

Through a system-to-system integration, recommendations can also be pushed back into loyalty systems for real-time, point-of-sale endorsements – now that is smart! Plus, information is fed back into the system for ML algorithms to improve outcomes with each iteration. With built-in churn prediction and customer segmentation, each department has exactly what they need to enhance customer experience and increase revenue.

Close the gap with Locstat!


Locstat will unlock your data potential

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