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Big Opportunity for Brands to Build Differentiated Reward Structures that Drive Customer Loyalty

Differentiation is the name of the game for loyalty marketers and a big opportunity exists now for brands to build or modify reward structures that add more value.

Digital benchmarking firm L2 Inc released its inaugural Intelligence Report: Loyalty 2017 that evaluates the successes and pitfalls of loyalty programs for 99 consumer brands across Activewear, Beauty, Big Box, Department Stores, and Specialty Retail. The report provides an analysis of the structure, benefits, and usability of loyalty programs regarding their added value for both customers and brands with an emphasis on providing tactical recommendations to sustain consumer engagement and promote brand advocacy.

“It’s no news that in today’s oversaturated market brands are struggling to retain the loyalty and attention of customers,” said Mike Froggatt, Director of Intelligence at L2. “Regardless, the majority of consumers are still dissatisfied with current loyalty offerings, creating an opportunity for brands to build reward structures that add value to core products and services while differentiating the brand.”

Last September, online poker card room PokerStars (owned by Amaya Inc.) announced that it was designing a new rewards program. Séverin Rasset, director of poker innovation and operations at PokerStars, told Loyalty360 that the point of any loyalty program is to reward customers who are contributing the most to a business.

“The first PokerStars loyalty program was created in 2006 and was very successful in achieving what it was built for rewarding customers who played a high volume of hands on our poker site,” Rasset told Loyalty360. “As we have evolved from poker-only to offering multiple games for our customers, we needed to re-think how we reward customers. Moreover, today’s consumers have different expectations for how and when they expect rewards; this is true in many industries. So, we must look at the totality of our how our consumers engage in our products, whether that’s poker, casino, sports betting, or a mix of the three.”

Here are some key findings from L2’s report:

Communicating Loyalty: Clear communication is imperative for loyalty program success. Seventy-seven percent of brands mentioned loyalty in the subject of at least one email campaign during May 2017. These brands enjoyed a substantial lift in open rates (from 19 percent to 24 percent) but failed to keep the momentum going as only six percent of total brand emails advertised loyalty-related topics in their subject lines during this same period.

Barriers to Entry: Fifty-six percent of brands automatically enroll users in their loyalty programs at account signup versus 39 percent who require additional information to enroll. Placing the onus on consumers to complete the signup process deters users, especially when the majority of programs (86 percent) lack any rewards for completing a profile.  

No Purchase Necessary: Thirty-five percent of brands reward loyalty members for non-transactional engagement such as incentivizing referrals and reviews, and linking social media accounts. Valuing consumers beyond their wallets provides several benefits as Department Store brands that reward non-transactional engagement also enjoy 48 percent more daily site visits, 13 percent long site visits, and a 5 percent lower bounce rate.

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