What's the Deal With Loyalty Programs

Whether it’s a local restaurant, a bagel shop, Hy-Vee, Chic fil a, or Starbucks, loyalty programs each have their unique pros and cons, but our team recently had an afternoon fireside chat (as another snowstorm came through) on the topic. Here are some highlights on what we see as the potential with loyalty programs.

Why do people join loyalty programs?

Adam: If they get something in return of value to them. Can be smaller depending how often the business is frequented but for the shopper / user, there has to be value. 

Richard: People join loyalty programs for two reasons. They either are already shoppers and feel they can get a little bit of value from the relationship, or they are new shoppers and perceive value in joining.

What is your favorite loyalty program, and why?

Adam: Kohl's has the best one that I am personally a member. We get something from them every month. Sometimes every other week and it is always a discount or deal.

Richard: By far, my personal favorite loyalty program is a local coffee shop’s program here in Des Moines. It is simple and easy to understand and rewards purchase volume, not spend. So many small purchase stores only reward spend, which doesn’t do a good enough job of building loyalty when the purchase isn’t deemed “valuable” enough for loyalty points.

Where are the opportunities with loyalty programs today, and tomorrow?

Adam: The struggle is always growing the program and constantly offering something that makes customers come back. Businesses have to switch it up enough to keep it fresh in the customers mind.  That's what I think Kohl's does so well. We get 30% off coupons and we think we have to use it. Then we'll get Kohl's cash and the same thing happens. It’s quite the circle they have created.

Richard: Loyalty programs need to be about more than just discounts and coupons. Reward the actual loyalty. CVS does a decent job of this. Chic-fil-a can sometimes do it well too. The opportunities for strong programs come from building a culture of rewarding and thanking the customers for the business (and loyalty). Also, personalization is the future and no one is doing it well. If businesses can figure out this, maybe loyalty program retention will improve.

Check out our article: The Keys to a Successful Customer Loyalty Program

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