{"id":12170,"date":"2020-11-06T14:59:59","date_gmt":"2020-11-06T19:59:59","guid":{"rendered":"https:\/\/brainstation.io\/blog\/?p=12170"},"modified":"2020-11-06T15:00:00","modified_gmt":"2020-11-06T20:00:00","slug":"building-digital-loyalty-programs-that-work","status":"publish","type":"post","link":"https:\/\/brainstation.io\/blog\/building-digital-loyalty-programs-that-work","title":{"rendered":"Building Digital Loyalty Programs That Work"},"content":{"rendered":"\n<p><strong>Building Digital Loyalty Programs That Work <\/strong>\u2013 the latest in <a href=\"https:\/\/brainstation.io\/events\/online\">BrainStation\u2019s Digital Leadership Event Series<\/a> \u2013 took place on November 5th, and featured three experts from McDonald\u2019s Canada, Brooklinen, and Ritual Vitamins.&nbsp;<\/p>\n\n\n\n<p>You can watch the full panel discussion here:<\/p>\n\n\n\n<p class=\"has-text-align-center\"><iframe loading=\"lazy\" src=\"https:\/\/player.vimeo.com\/video\/476406905\" width=\"640\" height=\"360\" frameborder=\"0\" allow=\"autoplay; fullscreen\" allowfullscreen=\"\"><\/iframe><\/p>\n\n\n\n<p>The humble loyalty programs of yesteryear \u2013 the era of \u201cbuy nine subs, get your tenth sub free\u201d \u2013 have come a long way in the digital age. Today, consumers have many more ways to interact with brands, including in bricks-and-mortar stores and pop-up locations, curbside and delivery, on websites and social media, and through newsletters and SMS. Each of these touchpoints represents an opportunity to implement a loyalty program with the goal of gleaning valuable data and, ultimately, driving consumer habits.<\/p>\n\n\n\n<p>We spoke with three executives overseeing ambitious and highly diverse loyalty programs \u2013 for McDonald\u2019s Canada, Brooklinen, and Ritual Vitamins \u2013 about how loyalty programs are changing, how they can be a key driver of customer experience and customer insights, and their best advice for making a loyalty program work.<\/p>\n\n\n\n<h2><strong>Every Loyalty Program Is Unique<\/strong><\/h2>\n\n\n\n<p>Unsurprisingly, different brands need different things from their loyalty programs. One of the key determiners here is the timescale at which purchases are made.<\/p>\n\n\n\n<p>At McDonald\u2019s Canada, for instance, Digital Director Adam Cooper oversees a loyalty program to drive daily purchases, which grew from an offline rewards card where every coffee purchased earned a sticker. \u201cA few years ago, we replicated the paper program within our mobile app,\u201d Cooper says. \u201cResults are strong. And when you couple it with something like a reorder feature, which increases the habitual nature and the ease of coming to McDonald\u2019s, the value proposition is pretty strong.\u201d<\/p>\n\n\n\n<p>Allie Donovan is Director of Email and Retention at Brooklinen, a D2C provider of bed linens and other homewares; unlike at McDonald\u2019s, her customers may go months or even years between purchases, meaning \u201cloyalty\u201d needs to be measured differently. For&nbsp; Donovan, loyalty is less about habitual behaviors and more about building a strong relationship. \u201cWe think that relationships have to be the very center of the marketing that we do,\u201d she says. \u201cWe have to acknowledge that our customers are helping us \u2013 we\u2019re very grateful for their business and we have to give them something in return.\u201d<\/p>\n\n\n\n<p>Loyalty also looks completely different at Ritual Vitamins, where everything is retailed through a subscription model. As Director of Customer Lifecycle and Growth Laura Brodie explains, repeat sales are built into the subscription plan, so the goals of the loyalty program are very different: \u201cWe look at our customer lifecycle on a monthly basis, based on how long they\u2019ve been subscribed, and we do lots of research as to what questions our customers have at what point in their tenure.\u201d&nbsp;<\/p>\n\n\n\n<p>Because loyalty programs are bespoke, they always begin with research \u2013 ROI being a prime consideration \u2013 and clear objectives. How do you define \u201cloyalty\u201d? What is your priority \u2013 retention, higher average order value (AOV), more customers? And are you sure you know what your customer hopes to get out of it?<\/p>\n\n\n\n<p>Depending on the market, \u201cthere could be years between purchases,\u201d says Donovan. \u201cWe had to think about the signals that tell us you\u2019re a loyal customer. Frequency and AOV can be very interconnected. But there are also signals like, are you coming to our site? Are you looking at the information we give you? We really think about retention and loyalty as one.\u201d<\/p>\n\n\n\n<p>Your definition of loyalty will shape your program in many ways. Some programs, like the typical points system, are highly visible to the customer. But some programs operate in the background. \u201cAs you\u2019re there longer, you\u2019re getting rewarded,\u201d Donovan explains. \u201cEven though you may not know it, you\u2019re seeing surprise and delight offers come through, not knowing that you\u2019ve earned them because you\u2019ve ordered a certain number of times. Some people really want that challenge of points and rewards, and others want to be much more passive \u2013 but they still want to be acknowledged.\u201d<\/p>\n\n\n\n<p>Especially in long-timescale programs, there may be a temptation to reward bad behaviors in an attempt to entice customers to reactivate \u2013 but this should be approached carefully. \u201cWe want to keep the relationship between what we pay for a customer and their lifetime value in check,\u201d Brodie says.&nbsp;<\/p>\n\n\n\n<p>The solution is to find incentives that work for your specific customer base \u2013 which could be as simple as a customized product recommendation, demonstrating that you understand their needs. There are many ways to appeal to your customers besides discounts: exclusive offers, content or events open to members only, including programming or a house publication, or pre-sale access to high-demand products; convenience, like the ability to pay through an app rather than waiting in line; bonus offers like free embroidery or engraving on a purchased item; free samples or gifts; and personalized or tailored content.<\/p>\n\n\n\n<p>In fact, one way to boost loyalty is to incorporate customer feedback into your product development cycle \u2013 showing them their input is valued while also making your products more appealing to them.&nbsp;<\/p>\n\n\n\n<h2><strong>UX at The Core of Loyalty Programs<\/strong><\/h2>\n\n\n\n<p>All the touchpoints mentions above \u2013 physical stores, curbside and delivery, online and social channels, email newsletters and SMS \u2013 correspond to a different stage of the customer journey, and as such, are part of the same UX.<\/p>\n\n\n\n<p>\u201cThe power is in the consumer\u2019s hands,\u201d Donovan says, \u201cwhereas 10 or 20 years ago, they just didn\u2019t have the choices that are available now, everybody really is your competitor. A bank is something very different from the homeware sheet business \u2013 but you might go to a bank\u2019s website, and they have smooth transitions from all their pages and you can get exactly what you want done. When you have a great experience like that, you suddenly expect it from everybody. If anyone is clunky and old-fashioned, it jars with you.\u201d<\/p>\n\n\n\n<p>Experience is key not only to attracting repeat customers, but also to building trust \u2013 whose importance to growing a business can\u2019t be overstated. As Brodie explains, \u201cWe equate trust with loyalty. And trust is based on so many things, especially with a product in the health space. Once you earn that trust, you unlock the ability to do a lot of different things in your customer experience. When we get customers to trust us, it means that, one, they\u2019ll stay with their habit. But two, they\u2019ll look for more and more from our brand. That\u2019s what loyalty really is.\u201d<\/p>\n\n\n\n<p>In other words, loyalty programs are not just a carrot to entice customers to spend. They\u2019re about building relationships by showing customers that you value both their business and their feedback, and being responsive to what customers want from your business. This also relates back to incentives: some customers are looking for a monetary reward, but community-building and showing customers they\u2019re being heard can be equally powerful.&nbsp;<\/p>\n\n\n\n<p>A loyalty program can reward far more than just making purchases, too. Donovan explains, \u201cWe designed our program in a way where you earn points for everything that you buy, as well as for some of the other activities that we want you to take, maybe liking us on Instagram or giving us your birthday \u2013 things that are very good indicators of your loyalty.\u201d&nbsp;<\/p>\n\n\n\n<p>In fact, there are several ways loyalty programs can teach you more about its members.<\/p>\n\n\n\n<h2><strong>Loyalty Programs Provide Customer Insights<\/strong><\/h2>\n\n\n\n<p>Besides incentivizing specific behaviors \u2013 both habitual ones as well as one-time actions like completing a survey or writing a review \u2013 there are at least three ways a loyalty program can yield insights about customer behavior: once when the points are earned, again when the points are redeemed, and finally, when customer behaviors are analyzed in aggregate.<\/p>\n\n\n\n<p>The first phase, when the customer is racking up points by completing different rewarded behaviors, reveals what actions a customer is taking (or not taking), giving you a window into where there\u2019s room for growth. \u201cWe get some really interesting trend lines on transactions, retention and habitual use,\u201d Cooper explains. \u201cIf we see you buying coffee every day, but we see that you never use the reorder function on the app, maybe we can start sending emails to say, \u2018Hey, have you seen this feature? Have you seen the value? You can now get your coffee in four clicks.\u2019 Similar to if we see you buy Happy Meals but you never use curbside service for mobile ordering.\u201d<\/p>\n\n\n\n<p>The way points are redeemed can also be a window into customers\u2019 values. Once you\u2019ve earned points with Brooklinen, Donovan says, \u201cyou can spend them in three ways: you can redeem them for a coupon, you can exchange them for a free item \u2013different levels, different amounts, and you can have lots of different items \u2013 or you can donate your points to Habitat for Humanity New York, which is a really nice way to give back and have the customer feel that they\u2019re being part of the charity effort.\u201d&nbsp;<\/p>\n\n\n\n<p>All these touchpoints are opportunities to peer into the mindset of individual customers. But taken in aggregate, these behaviors can also reveal new patterns in statistical data. \u201cWe get top-line, high-level data on just how many people are engaging with our digital experience and our loyalty programs,\u201d Cooper says. \u201cWhere we go from there is retention and turning profitability on for every offer, and the programs at large. When you can do the math on that, it really is a huge opportunity. Especially during the pandemic, when we\u2019ve had to close the inside of some restaurants, there\u2019s been an opportunity in how loyalty can help \u2013 knowing the customer can actually help us to get them into a curbside spot or open up mobile ordering to them. Having that relationship with our guests, knowing a little bit about them, has allowed us to see where we can convert to help drive the business.\u201d<\/p>\n\n\n\n<p>Brodie confirms the value of this data. \u201cWe recently went through and audited our survey process to make sure that we really were learning about the customer at every stage, and not having it really loaded toward onboarding, for example. We look at tons of different touchpoints, and then we can also look at engagement within their account. Are they snoozing their order, are they changing their delivery date? Are they taking an active role in managing their subscription?\u201d This can feed directly into top-level business strategy: \u201cWe work super collaboratively with our product and data teams, as well as our customer insights team. The main starting point is, what are we learning about our customers at each stage? Then we\u2019ll take survey data and match it with the behavioral data we\u2019re seeing in terms of product usage and metrics like retention. Only once we bring all of those pieces together do we try to formulate recommendations, and that will go into the development of more formal features and things that the product team would work on.\u201d<\/p>\n\n\n\n<p>\u201cI always think of a retention and customer relationship management team like a central hub of the company,\u201d Donovan adds, emphasizing the importance of these insights to all levels of a business. \u201cEveryone either wants something from you or you need something from them. It\u2019s at the center of what everyone\u2019s doing.\u201d<\/p>\n\n\n\n<p><\/p>\n\n\n\n<h3><em><a href=\"https:\/\/brainstation.io\/events\/online\">Register now for the next BrainStation Digital Leadership Event.<\/a><\/em><br><\/h3>\n","protected":false},"excerpt":{"rendered":"<p>Watch a recap of the Building Digital Loyalty Programs panel discussion \u2013 the latest in BrainStation\u2019s Digital Leadership Event Series.<\/p>\n","protected":false},"author":117,"featured_media":12172,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[783,160,1276],"tags":[332,136,1123],"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v18.9 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Building Digital Loyalty Programs That Work | BrainStation\u00ae Blog<\/title>\n<meta name=\"description\" content=\"Watch a recap of the Building Digital Loyalty Programs panel discussion \u2013 the latest in 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