Loyalty Programs Are the Strong Foundation of Customer Engagement

There was a time when growth was all about how many people you could coax through your brand’s front door. Today, the smart money focuses on retention—or what you’re doing to keep customers engaged once they’re in the building, so to speak, and to keep them coming back. Loyalty programs are proven retention workhorses, but they’re not set-and-forget. The foundation of lifetime value The members of your loyalty program are already committed to your brand and so are easy to take for granted. Get them to sign up, stack up some tiered incentives and the thing runs itself, right? Not so fast. By raising their hands to join the program, loyalty members are indicating their openness to deeper engagement, increased lifetime value and, perhaps most importantly, brand advocacy. Taking a set-and-forget approach to loyalty campaigns means missing out on valuable opportunities. The never-ending demands of running day-to-day campaigns can distract from innovations that might transform customer relationships. Dig down under the assumptions that frame your brand’s loyalty strategy and think about how you can strengthen the foundations of customer relationships for the long run. QSR’s digital leap forward For great examples of how a customer loyalty program can help reshape a brand’s overall customer engagement strategy, take a look at what happened with fast food during the pandemic. Regardless of where QSR brands were on their digital transformation journeys, most saw a big spike in mobile use as people looked for safe, contact-free transaction options. Two case studies illustrate the point and provide insights for others looking to leverage loyalty programs for greater gain. In 2020, KFC U.K. & Ireland began focusing on mobile and its loyalty program through the KFC app. The team’s first cross-channel campaign with this new orientation was a holiday promotion for free gravy promoted through a four-day series of emails and mobile push notifications. The results were significant: Mobile push direct open rates were four times the industry benchmark, and conversion rose by 2%. The brand had relied heavily on email-only promotion in the past, and customers were clearly hungry for the more immediate mobile messaging call to action. The campaign also set a new precedent for cross-team collaboration between the brand and its agency. What to take away (along with the free gravy): A customer-centric strategy is a cross-channel strategy.Break down the silos that keep teams from collaborating.Leverage mobile-first messaging capabilities to provide real-time relevance. Wake up customer advocacy The Coffee Club is Australia’s largest café franchise with more than 40 million customers annually across nine countries. Company growth and changing consumer behavior during the pandemic shifted the focus on customer engagement through mobile. Coffee Club opted to seize the moment and bring its loyalty program and app in-house. There were some clear early wins, as Coffee Club sent email and in-app messages with bar-coded coupons that could be scanned at the point of sale. Thanks to the newly integrated tech ecosystem, the marketing team could personalize offers to specific segments based on their custom attributes and purchase events. The Coffee Club was able to target loyalty members with messaging specific to wherever they happened to be in their journey with the program. The team didn’t stop there, however. Tired of seeing low-rated reviews for its third party-run loyalty app, the Coffee Club team identified frequent users of the in-house app and asked them to review the new version in the app store. Over a six-month period, loyalty-driven sales increased by 35%, and renewal conversion rates for their paid VIP program also saw a 62% increase. What’s more, the conversion of their loyalty program to a digital format led to a demographic shift, with millennial parents and younger users increasing as a share of The Coffee Club audience. The hot takeaways: Capitalize on loyalists’ good feelings as they enjoy a better customer experience.Create a virtuous circle with a retention strategy that drives advocacy, that then further powers acquisition. Customer loyalty pays off in many ways. Counter the rising costs of acquisition by investing in retention that drives long-term value—it’s the right thing to do, and it’s more cost effective. Far-sighted marketers will focus on how insights gained through retention efforts can strengthen foundational customer engagement strategies. Build from there, and enjoy the sweet view from the top. Restaurants That Thrived During Covid Can Thank On-the-Go Diners