Steps to implement a loyalty programme

In a challenging economic climate with increased competition and unprecedented choice, businesses know they need to develop “sticky” customers — not only attract customers, but also retain, nurture and increase their lifetime spend.

Loyalty programmes are an ideal vehicle for achieving this, and have the added benefit of providing valuable customer data and insights to help shape important business decisions.

Data is at the heart of the process. Loyalty programmes score customers based on metrics such as how much they are buying, what they are buying and where they are buying. As time progresses these metrics can include things such as: are the customers growing? Are they spending more year on year? Are they engaged?

Pulling this information from a loyalty programme requires a great deal of integration with various systems. Are each of these systems in the organisation up to date? Is middleware in place to facilitate these connections? How do we get to the source data, and what does it look like? Is it clean and usable, or does it resemble the often messy data found in many organisations?

The successful implementation of a loyalty programme is a testament to an organisation’s data maturity. On the flip side, if an organisation’s data is too untidy, scattered and inaccessible, the loyalty programme will be limited to the data closest to the programme itself. This is a significant issue, as it provides the C-suite with valuable insight into the organisation’s underlying operations and data infrastructure.

Generate insights to support business decisions

One of the more exciting aspects of a successfully implemented loyalty programme is the ability to learn and adapt and the agility and closeness it fosters with customers. Yes, you are trying to provide incentives to customers to act in a certain way, but in the process, customers insights will be revealed.

Most loyalty programmes have a range of dimensions which forces organisations to think broadly across the business — and it all boils down to data. A bugbear that many businesses can attest to, is that it is one thing to have all this data, but the ability to analyse and use the data effectively  presents an entirely separate set of challenges.

When done properly, the data will drive decisions that lead to more targeted and successful loyalty programme strategies, benefiting both the organisation and its customers. This may all seem daunting, but there are a few pieces of advice that would make any loyalty journey far simpler and more likely to succeed.

Here are five steps to successfully implement a loyalty programme:

1. Simplify

Find the one or two things that you know you want to work on, such as awarding points if a customer participates in surveys or maintains the accuracy of their personal data, as opposed to chasing your entire wish list.

Begin by implementing those one or two things properly and cleanly, ensuring a well-structured foundation, and then expand from there. Simplify the metrics you use for scoring and tiering customers, and consider where and how clean the data is that informs those metrics. Reduce a wish list of 20 metrics to a solid, clean list of 10 or 12 by actively questioning them, looking for repetition and pursuing efficiency.

2. Design to support, not undermine, other systems

Imagine a product team decides to run a promotion on product X — if the loyalty programme rewards customers for buying that product, it is being double discounted. Regardless of the customer reward you offer, it will come at a cost, which will add to the overall cost of sale at a financial level. This means that you need to be careful not to double discount a product and in so doing design a loyalty programme that competes with other incentives or systems.

3. Map your customer processes

Map the intricate details of your sales and customer processes. By understanding these processes thoroughly, you can tailor the loyalty programme to not only align with your specific business operations, but also create a more personalised and relevant programme that offers rewards and incentives that are closely aligned with customer preferences, increasing the programme’s effectiveness.

4. Have important pricing debates

Delve into areas that many businesses find sensitive, such as pricing strategies and the rationale behind them. These discussions naturally lead to exploring options for more effective discounting practices and even the potential to reduce reliance on discounts. While these conversations may initially seem uncomfortable, they present essential opportunities for growth and improvement in the business.

5. Place trust front and centre

Imagine a questionnaire is sent out to customers and those who complete it are scored, in other words rewarded for their actions. What about customers that didn’t receive the questionnaire and didn’t get the opportunity to get the reward or earn points? This is far more common than one would imagine, and is a recipe for broken trust. Remember, you want a loyalty programme, not an antiloyalty programme. An effective loyalty programme requires very careful design, building and management.

A well-designed and well-run loyalty programme can dramatically improve a business’s long-term relationship with its customers. Beyond providing incentives for behaviour, it offers a business the opportunity to learn more and gather important insights.

Leandi Campher is a solution architect and Mark Biagio is a technical architect at Exah.

The big take-out: Most loyalty programmes have a range of dimensions which forces organisations to think broadly across the business — and it all boils down to data