What it Takes to Deliver a Customer-Centric Loyalty Program in 2023

By now most businesses understand loyalty programs are critical to keeping customers engaged, especially in difficult economic times. But whether deciding how to implement a loyalty rewards program or upgrading an existing one, there are some valuable components that can assure a superior customer experience and return.

Consumer confidence is on a roller-coaster ride. The Conference Board Consumer Confidence Index increased in December following back-to-back monthly declines in October and November to reach its highest level since April 2022, but then declined again in January 2023. Meanwhile, the U.S. Index of Consumer Sentiment (ICS) has been on the rise since July 2022, and rose to 64.90 in January 2023, up from 59.70 the previous month and slightly down from 67.20 a year ago.

For businesses, loyalty programs are critical to keeping customers engaged. But are these schemes meeting customers’ real needs and wants?  According to Merkle’s 2022  Loyalty Barometer Report, 79% of consumers are more likely to do business with a brand because of its loyalty program and 91% have earned or redeemed a reward in the past six months. Merkle also found that the most appealing type of loyalty program is one that offers consumers cashback. The key for brands is to make sure they’re meeting consumers where they are and delivering the benefits that are most meaningful to them.

There are critical loyalty reward program components that help ensure an effective user experience with high customer involvement. Here is a checklist of the elements your consumer loyalty program must have.

Help Consumers Mitigate Economic Swings

Loyalty programs typically address the concerns of consumers to save more money in inflationary/recessionary times, because they offer more value and help consumers stretch their budgets more. In fact, Wildfire’s 2022 research report  found that 90% of respondents are more interested in saving money by receiving discounts, utilizing coupons and earning cashback rewards because of rising prices.

Rewards programs offering a “return on spend” can protect consumers even during inflation, because as the consumer spends more, they also earn more. The restaurant chain Fazoli’s offers a great example, because in their program guests earn 1 point for every $1 spent (so even as prices go up, the consumer can earn more points as they spend.) ClickZ published a mini-case study from the brand which indicated that loyalty program members saved an average of $10 per guest.

And loyalty programs can benefit businesses too: as an example, the Paytronix Annual Loyalty Report 2022 found loyalty programs are helping restaurateurs combat inflation as well, with 55% of restaurant loyalty customers increasing their average check size more than the price of the average item increased.

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Make programs convenient and simple

One of the main reasons consumers do not participate is because a program is complicated, and consumers assume it takes too long to get rewarded. For example, in our 2022 study, 47% of respondents said they already participate in some sort of rewards program from their bank, yet 38% of those consumers had never even received any reward and 63% of these indicated it was due to confusion about the programs.

Give customers multiple ways to engage in the loyalty program to make it convenient for them to participate. Brands should not make the customer jump through hoops to earn rewards or realize loyalty program benefits. In the same Fazoli’s case study noted above, the brand makes it easy for customers to “choose their own adventure” with rewards, as they not only offer flexible redemption options, but also a simple points-based-on-spend earning model.

Retail loyalty programs that offer easy-to-understand points on spend models, or financial services companies which offer customers cashback rewards for online shopping, are also great examples of delivering simplicity for consumers. You spend, you earn, you get benefits. Easy.

Make it part of the user experience

Loyalty programs should be as unobtrusive and seamless as possible, and part of the customer journey whenever the shop with a brand. For example, as they are logged-into the brand’s app or on the website, loyalty earnings should just accrue as they perform actions or make purchases. In fact, accessing loyalty programs on a mobile device is at the top of the list for consumers with more than 73% of shoppers preferring to access loyalty programs when shopping online and over 63% wanting access to programs on their mobile device while they’re shopping in store .Bottom line: don’t make the customer take extra steps to gather points or activate rewards, or detour from their natural path interacting with your brand, to do so.

Be Exclusive: Only Members Get a Given Perk

Provide extra loyalty benefits. Some brands in the hospitality and events industry offer special benefits like free cocktails at a restaurant, priority seating at shows, special queueing at theme parks, and other distinctive loyalty member offers.

Bath & Body Works, for instance, offers early access to forthcoming fragrances. Airlines offer rewards like lounge access, waived bag check fees, free concerts, and gift cards. Sephora’s Beauty Insider rewards program members can redeem points for things like gift cards and discounts, plus limited edition products or in-store beauty tutorials.

Create relevancy

The program should present rewards fitting the brand’s image, product line or mission statement; and/or personalized to fit the consumer’s shopping characteristics.

For example, VIP loyalty program rewards for Designer Shoe Warehouse (DSW) uses data gleaned from the loyalty program to hyper-personalize and create extremely relevant email offers to individual members, including birthday offers. Recently, an NYC start-up called Stake created a rental loyalty program in which app users get up to 5% of each rent payment back in a personal account if they pay on time. And renters who choose to keep at least 80% of the balance in their account receive a bigger reimbursement.

Sixty percent of respondents said they are buying less expensive alternatives, and 43% are seeking out discounts to help them afford their preferred brands, according to a consumer survey from NCSolutions. In response, General Mills launched its first brand loyalty program so loyal customers can redeem points for gift cards and merchandise.

Keeping customers happy means… keeping customers

The likelihood of using loyalty to shape relationships between consumers and their favored brands has reached a critical point. Cultivating loyal customers is essential for business sustainability.  Keeping loyalty programs easy to use and relevant to consumer’s lives is critical to program success. Making it worth shopper’s time is also imperative, with a Lending Tree survey finding 52% of consumers will leave a loyalty program if the rewards aren’t worth it.

On the flip side, empowering shoppers to find the best deals and automatically applying rewards such as cashback drives more revenue for retailers and other businesses and facilitates a positive brand association for the entire reward chain.

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About the author

Michelle Wood oversees the merchant network side of the Wildfire Systems platform. Her team builds productive partnerships with online retailers and affiliate networks, bringing them into the Wildfire platform and improving their incremental revenue opportunities. With over 16 years of experience in digital media, affiliate marketing and influencer media sales, Michelle has worked with many of the world’s most notable enterprise e-commerce companies to acquire new and loyal customers and exceed revenue targets with positive ROI. Prior to Wildfire, she held executive positions with leading performance marketing companies including ShopAtHome.com and Coupons.com.