Consumers who opt to become members of loyalty programmes may still not be getting everything they really want, according to Anthony Monger of Grass Roots, who explains how loyalty programmes can deliver more than just extra value for customers. This article is copyright 2012 The Best Customer Guide.

The company recently carried out a survey of customers from one of the largest UK mobile network operators to find out what they thought was most important from a loyalty programme, and found that:

  • 92% said rewards and offers had an influence on purchase, with 43% agreeing they have a great influence;
  • 96% said that reward choice is key to a loyalty programme, and 62% said being able to share reward with friends and family was important
  • 97% said they would either consider or be happy to give companies more information on their likes and dislikes in return for better, more relevant rewards.

Grass Roots spends a great deal of time talking to its clients about what they will get out of a loyalty programme: increased tenure, market analysis, higher spend, greater advocacy, and so on. Yet, unless the programme actually hits the spot with the customer, it won't have the power to drive the right activities and behaviours to achieve a real return on investment. So, creating the right loyalty contract (the 'give-get' balance) is key to success. And even if you think you have all the answers now, it's essential to keep asking the questions, looking at the data and analysing trends, because wants and needs are constantly evolving.

Of course, achieving the right balance between 'give and get' for both you and your customers isn't just a matter of 'What' the reward is, it's also a blend of why they are going to get it, how they go about claiming it, when will they receive it - and sometimes even who the reward is for. Sharing rewards helps extend the feeling to a wider audience, spreading the positive brand experience to friends and family. As well as sharing with friends and family, and traditional charitable giving, there are now many community-based programmes, as pioneered on a grand scale by Tesco's Computers for Schools programme, which dates back to the mid 1990s. This approach has been adopted and adapted in many ways since then.

As well as the obvious features (i.e. base level of reward, facility to spend or save, reward choices), your loyalty programme should ideally have some kind of surprise element that delights the customer. O2's highly successful Top-Up Surprises programme is an excellent example of this, in which the 'surprise' could simply be an additional bonus level, or perhaps an additional exclusive offer. For example, Barclays Premier regularly offers members the opportunity to win tickets to events, over and above their expected rewards.

Your loyalty programme should also be able to accommodate short term tactical goals to drive customer behaviours at key points in the marketing calendar, such as supporting product launches, driving sales during traditionally slow periods, and keeping up with - and ahead of - competitor activities. This responsiveness has become more than a luxury - it's essential.

And of course, if you're going to make the next communication or offer hit the right spot, you need data. The right data, used the right way at the right time. Segmentation needs to be dynamic, so that your customer's profile is continually updated, based on their experiences with you over time.

Data analysis is also crucial to reducing churn. By accurately mapping the customer journey and experience over time (by collecting actionable data, and by looking at all potential influences and variables), it becomes possible to predict the most likely churn or drop-off points. When are your customers most likely to become restless, bored or dissatisfied? When are they most likely to look for a replacement service or product? How long is it since they last heard from you? When do you need to show you care, and are thinking about their needs? Regular, relevant and personalised contact through your loyalty programme goes a long way to preventing defection to other brands, and to increasing the lifetime value of each individual customer.

But what is your programme's staying power like? The 'halo effect' is that lovely warm, fuzzy feeling we get when we join a great scheme, sign up to an attractive service or receive our first reward; but eventually it wears off. What can you do to keep your scheme fresh and appealing to the customer? While we don't recommend chopping and changing regularly, it's wise to incorporate those tacticals, surprises and extras into your long-term programmes to prevent your offering appearing stale and inflexible.

Finally, loyalty programmes need to be right from start to finish, from the initial offer to doorstep delivery. An increasing number of brands are opting for end-to-end service delivery, leveraging their supplier's commitment, knowledge and expertise for each stage of their programme. It also makes your life a great deal easier if you're only dealing with one supplier. From signing up online to signing for real for a surprise package, your customer should be impressed and delighted with their experience. Get all this right, and you'll be finding and keeping friends for life.