Loyalty program: what it is and how to create a successful program

What are loyalty programs?

Loyalty programs are a set of strategies that a company adopts with the main objective to reward and encourage customers, developing a relationship of loyalty, so that they continue consuming your product or service. 

Generally, loyalty programs are based on the accumulation of points equivalent to the amount spent by the customer at the time of purchase. These points can be exchanged for rewards determined by the company. 

But with the assistance of new technologies, such as Artificial Intelligence, loyalty programs are becoming increasingly diversified and personalized. This means that today they go beyond the points dynamic and offer various types of rewards according to the profile of the company and its customers. 

In this way, the loyalty process is further intensified, as the program matches the customers' expectations, needs and desires. 

In addition, the use of the new technologies allows loyalty programs to be a great source of data. Based on it, companies can improve their own loyalty strategies or even apply the insights to other business initiatives.  

To learn more, check out our articles about Big Data and Database Marketing. 

Why is it important to have a loyalty program?

Imagine that a consumer is choosing among two brands: the first one doesn't use loyalty strategies yet, while the second one has a loyalty program that rewards its customers for using its products/services.

It is most likely that the consumer chooses the second brand, because he understands that with it there will be an exchanged relationship in which both parties are benefited.

Therefore, loyalty programs are essential for companies that want to capture and retain customers.

How did loyalty programs come about?

Between the 1930s and the 1980s, Americans experienced the fever for
S&H Green Stamps, one of the world's first loyalty programs run by Sperry & Hutchinson.  

In this program, consumers received stamps after making purchases at supermarkets, shopping malls, and gas stations, among other partner establishments. These stamps could be exchanged for various products in the catalog.  

What kinds of rewards can a loyalty program offer?

Loyalty programs are not just about collecting points, as many people think. With the use of integrated communications (omnichannel) and technologies (such as Artificial Intelligence and Big Data), loyalty programs work in many ways and offer varied and personalized rewards to customers.

  • Discounts: offering discounts is a great way to encourage your customer to keep using your product or service.
  • Vouchers: vouchers with a certain amount available for the customer to make a purchase are also an effective way to get them to return to your business.  
  • Cashback: cashback is a benefit that is in high demand today and is characterized by returning to the customer a percentage of the amount spent on the purchase. 
  • Monetization of points: made possible by new technologies, this reward transforms accumulated points into cash available for online payments.  
  • Quick wins: through resources such as gamification, the customer can have access to instant rewards that stimulate a sense of urgency.  
  • Exclusive products and services: offering premium products and services feeds the feeling of exclusivity among customers and increases the emotional bonds between them and the brand. 

What is the impact of technology on loyalty programs? 

As we mentioned before, nowadays, technologies play a key role in all processes of a loyalty program, from its creation to its execution. 

The data-driven culture, for example, encompasses all the actions of an organization with methodologies structured from databases. Thus, it is crucial that a company that wants to create a loyalty program has this culture implemented so that data processing is done efficiently.

Big Data analysis allows the development of insights that assist in planning and decision-making, making it possible to create more assertive and targeted actions. 

Therefore, it is possible to use data to develop highly personalized strategies for the target audience, increasing the chances of loyalty and improve the loyalty program itself from the data collected. 

Furthermore, Artificial Intelligence is already being used by several companies in their programs. This technology improves the communication and interaction process between customer and brand, answering questions in a quick and accurate manner and offering personalized shopping experiences according to the consumer's profile. 

What is the future of loyalty programs?

Considering changes in consumer habits caused by the COVID-19 pandemic and the development of new technologies, Indico has listed the top 8 trends for loyalty programs in 2022, check it out here

Also download our free ebook Loyalty of the Future. After reading it, you will have relevant insights to take the best path to create a successful relationship with your customer. 

How to create a loyalty program?

Designing, structuring and putting into action a loyalty program is not an easy job, but Indico is here to help you. Check out our article about the 10 steps to structure a loyalty program.

Indico Loyalty is also prepared to transform your customers into fans. Visit our website and get to know our clients and cases and be part of this revolution!

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