WHITE PAPER
Building the
Three Pillars
of a Best-in-Class
Loyalty Program
LOYALTY PROGRAMS IN
NORTH AMERICA
2/3
OF U.S. CONSUMERS
BELONG TO A LOYALTY
PROGRAM
8
THE NUMBER OF LOYALTY
PROGRAMS THE AVERAGE
CONSUMER BELONGS TO
The North American Technographics Customer Life Cycle
Survey from Forrester Research
78 64
%
%
OF U.S. CONSUMERS SAY
SAY THEY INFLUENCE
LOYALTY PROGRAMS SAVE WHERE THEY MAKE
THEM MONEY
PURCHASES
Forrester Research’s Loyalty Program
Participant Profile
76
%
WHITE PAPER | Building the Three Pillars of a Best-in-Class Loyalty Program
Does it seem that loyalty programs litter the ground like gravel these days?
Does it seem every company has one, no matter how questionable its value
might be to the organization? Does your company have a rewards program
in place but haven’t seen the payoff you expected, let alone enough benefit
to justify continuing it? Perhaps your company has not yet taken the leap
into the world of rewards.
This white paper will explore the factors involved in creating and/or refining
a loyalty program, and explain the three fundamental pillars of all best-inclass rewards programs: content, competition and communication.
Creating Mutual Value in a Loyalty
Program
Loyalty programs do abound in North America, and consumers indicate
they’re receptive to participation. Consider these statistics, culled from
multiple studies to the left.
Yet for all that expressed and implied interest in rewards programs,
less than 10% of all loyalty program memberships are actually active,
COLLOQUY reports. Why the disconnect? And how can your organization
ensure the high levels of participation that equate to optimum benefit for
both the company and its customers?
OF NORTH AMERICANS POLLED BY NIELSEN SAID THEY
WERE MORE LIKELY TO CHOOSE TO DO BUSINESS WITH
RETAILERS THAT OFFERED LOYALTY PROGRAMS
Nielsen Global Survey of Loyalty Sentiment
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WHITE PAPER | Building the Three Pillars of a Best-in-Class Loyalty Program
To succeed, a rewards program must create value – for both the consumers
and the company offering the program. To effectively generate loyalty, a
program must be demonstrably applicable to the needs and motivations of
61
%
the targeted consumers. It must offer customers rewards relevant to their
lifestyles, rather than simply offering promotional materials in the guise of
“rewards,” or – even worse – merchandise, discounts, and incentives that the
consumer doesn’t want or need.
Creation of a relevant rewards program requires you to understand who
among your customers most wants such a program, and is most likely to
make use of it. You need to understand the motivations that guide their
purchasing habits. Different consumer groups will have different priorities.
OF NORTH AMERICANS
Their motivators will vary, as will the tactics that convince them to give
SAID A BETTER PRICE
their loyalty to a particular brand. For example, the Nielsen study found
WOULD BE MOST LIKELY
that in North America, 61% of respondents said a better price would be
TO MOTIVATE THEM
TO SWITCH BRANDS
most likely to motivate them to switch brands, service providers or retailers.
Yet in emerging regions, such as Asia and Africa, better quality was a top
motivator and price was less important.
Finally, you must craft strategies and offerings that satisfy those purchasing
motivators and create real value for the consumer. When customers feel a
loyalty program delivers true value, they will be more likely to make active
use of it, creating a level of interactivity and engagement that enriches the
customer-brand relationship.
© Deluxe Enterprise Operations, LLC. All rights reserved.
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WHITE PAPER | Building the Three Pillars of a Best-in-Class Loyalty Program
CONTENT
Three Pillars of Successful Programs
The variety of companies employing rewards programs is as vast as
the diversity of consumers who participate in them. Yet whether the
sponsoring company is an airline, restaurant, credit services provider, bank,
mobile provider or retail establishment, the success of its loyalty program
rests on three universally applicable pillars: content, competition and
communication.
COMPETITION
The most effective loyalty programs combine great content and engaging
competition that are communicated and accessed through multiple
customer touch points. All three elements must work in tandem, achieve
balance and complement each other. If one pillar is weaker than the other
two, the effectiveness of the program will inevitably collapse. When all
three work together in perfect balance, a rewards program can truly build
consumer engagement and brand loyalty. However, there appears to be a
steady base of consumers who, when faced with certain types of events –
a birthday gift or paying a neighborhood teen for yard work – continue to
regard paper checks as an effective solution.
COMMUNICATION
© Deluxe Enterprise Operations, LLC. All rights reserved.
It’s worth noting that recent advancements by Apple Pay and digital wallets
are better suited to displace existing card (and to a lesser extent, cash)
payments, rather than checks.
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WHITE PAPER | Building the Three Pillars of a Best-in-Class Loyalty Program
CONTENT
Pillar One: Content
It may be a circular argument, but it’s true nonetheless: if you want to
generate interest in your content, you must provide interesting content.
While the demographics of your target audience will influence how you
define “interesting” for your program, certain fundamentals apply. Great
content is varied and robust, never bland and stagnant. It consistently offers
popular, most-desired products and services while regularly introducing
new ones. It holds consumer interest by blending aspirational products
and services with everyday items – a mixture that helps ensure consumers
interact with the program frequently.
Offering multiple and varied engagement and redemption opportunities
will ensure your rewards program is well-rounded. The quality of your
merchandise, incentives and other offerings, however, is perhaps even more
important. Quality products generally fall into two categories: aspirational
and every day.
Aspirational content secures interest. If your rewards program offers
merchandise (and it should, since studies show most consumers favor such
tangible rewards), you have a plethora of opportunities to offer high-level
content that will capture consumers’ interest. Offerings of hotel stays,
cruises and luxury items from high-end brands appeal to consumers with an
aura of exclusivity, and cultivate consumer perception of your program as
high value. Typically, redemption for high-end merchandise requires more
points and a longer time investment, leading to greater investment and
engagement from program participants as they work toward earning their
© Deluxe Enterprise Operations, LLC. All rights reserved.
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WHITE PAPER | Building the Three Pillars of a Best-in-Class Loyalty Program
82
%
SAY LOW-COST AND
FREE MERCHANDISE
luxury reward. Consumers may undertake points-earning behaviors more
frequently in an effort to reach their goal.
Everyday products spur more frequent interaction. While aspirational items
grab consumer attention, everyday offerings maintain it. Product offerings
that require fewer points to redeem afford program participants quick – and
in some cases instant – gratification, especially when these are products the
consumer would be purchasing anyway. Apparel, home goods, magazines
and similar merchandise fall into the realm of everyday purchases for many
consumers. By offering a broad variety of everyday merchandise, you
elevate the likelihood of more frequent engagement as consumers come to
ARE MOST IMPORTANT
think of your program as their first stop when shopping for such items.
BENEFITS
Most importantly, your program must deliver a feeling of exclusivity for
members. That exclusivity must also encompass real savings on both
aspirational and everyday merchandise that can be realized only through
program participation. Finally, be sure your merchandise mix includes both
discounts and freebies; 82% percent of North Americans say low-cost and
free merchandise is the most important benefit a loyalty program could
offer, according to the Nielsen survey.
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WHITE PAPER | Building the Three Pillars of a Best-in-Class Loyalty Program
COMPETITION
Pillar Two: Competition
American consumers are by nature a competitive lot, and everyone loves
to win. Incorporating an element of competition into your loyalty program
can create greater interest and excitement among participants. That drive
to win can motivate consumers to more frequently engage in behaviors that
will profit your brand. To create competition, your program must address
three key points:
VARIETY
STRATEGY
Multiple competitive
elements, such as daily
deals, auctions and
sweepstakes, appeal to a
wider audience and provide
more opportunities for
participants to “win.”
Create a plan to ensure
your competitions
are fresh, varied and
surprising. Mix things up
with varying frequency,
timing, prizes and number
of winners.
MULTIPLE CHANCES
TO WIN
The more opportunities
available to win, the more
consumers will be likely to
participate, and to interact
with the program more
frequently. Multiple prizes
also increase the perceived
value of the program.
Competitive opportunities also allow you to engage with a broader
range of consumers, including those who traditionally have lower levels
of participation in rewards programs. Finally, competition is a great way
to recapture and reinvigorate the interest of participants who may be
“hoarding” points due to apathy.
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WHITE PAPER | Building the Three Pillars of a Best-in-Class Loyalty Program
COMMUNICATION
Pillar Three: Communication
Content and competition will be useless without effective communication.
It’s essential to promote the value of your rewards programs through
multiple channels frequented by each target demographic. Communications
should be relevant, timely and frequent – but not overwhelming.
In addition to traditional communication vehicles, such as direct mail,
communication strategies should also encompass digital channels. In
today’s increasingly digitized world, consumers are fully invested in mobile
access. They’re already communicating with their banks, service providers
and social networks through digital channels; they’ll expect to engage with
their rewards programs digitally as well, whether it’s through their desktops,
laptops, tablets, or smartphones.
It’s important to consider the content of your messaging when choosing a
communication channel. For example, while a desktop may better facilitate
extended browsing through a catalog of available rewards merchandise,
the mobility and screen size of tablets lends them to promotion of (and
participation in) program elements such as auctions or sweepstakes. The
audience targeted will also influence the communication channel you
choose. Younger audiences may be more open to mobile, while more
mature groups may still prefer direct mail or even a phone call.
Finally, don’t underestimate the importance of an effective customer call
center. While the majority of program participants may choose to engage
online, those who do call will be coming to you with an issue. A positive
experience with your call center can enrich the customer relationship and
cultivate greater loyalty.
© Deluxe Enterprise Operations, LLC. All rights reserved.
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WHITE PAPER | Building the Three Pillars of a Best-in-Class Loyalty Program
64
%
Conclusions
Loyalty programs are here to stay, and effective ones deliver value to
both consumers and the company offering the rewards. Loyal customers
are, without question, more valuable than disengaged ones. According to
Forrester, loyalty program members who participate frequently in their
programs are more willing to spend more for products and services.
When content, competition and communication balance perfectly,
a loyalty program achieves its goal – and creates greater value for
consumers and company.
50%
WANT MORE INFORMATION ABOUT THE DELUXE
LOYALTY PROGRAM?
Contact us today.
EMAIL
[email protected]
SEARCH
www.deluxerewards.com
CALL
888.733.3110
© Deluxe Enterprise Operations, LLC. All rights reserved.
Listen. Solve. Deliver.
9
WHITE PAPER | Building the Three Pillars of a Best-in-Class Loyalty Program
About Deluxe
Since 1915, Deluxe has been working hard as a partner for financial institutions to
drive deeper customer engagement and more profitable revenue. As the financial
services industry has evolved, Deluxe has been an active participant in shaping it—
with the calm assurance of a company that has done it before.
Today, thanks to collaboration, innovation, and acquisition, Deluxe has an evergrowing portfolio of retail and commercial banking FinTech solutions focused on
helping our clients manage the customer lifecycle—acquire, onboard, engage, and
operate. Our growing array of inventive, client-inspired solutions are designed to
help our clients grow in a changing, competitive landscape:
• Data and Analytics
• Digital Channels
• Marketing Services
• Performance Management
• Rewards and Loyalty
• Fraud and Risk Solutions
• Check Programs
Learn more at fi.deluxe.com
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