Nearly 90 percent of American shoppers participate in rewards programs to gain points, discounts or prizes for purchasing products, but do these programs actually create engaged customers?
Allegiance, Inc. explores this very issue in a new white paper entitled "Buying Loyalty: Do Rewards Programs Translate Into Customer Engagement?" The paper analyzes rewards programs, offering suggestions on engaging customers so that customer loyalty does not depend solely on the presence or absence of a reward.
"Rewards programs have become pervasive in business today, but they alone cannot foster the emotional connection that is needed to develop long-term customer engagement," says Kyle LaMalfa, Allegiance's best practices and loyalty expert. "To connect with customers' hearts and minds, companies need to encourage two-way communications and create a convenient way for customers to express their comments and concerns. Engagement programs work hand-in-hand with loyalty programs to strengthen the long-term bond between the customer and the brand."
The paper also discusses the three factors used to determine the effectiveness of rewards programs:
• Cost. What does it cost to run loyalty programs? If a company gains more than they spend on managing the program, is that enough reason to have one?
• Data. How is the data being used? Is the data being used to improve the organization, the rewards program itself, the customer experience? Are they using the rewards program data to retain customers?
• Program evolution. "What have you done for me lately?" Once you give customers discounted or free stuff, what will they want next? Can companies afford to keep giving more?
Rewards programs can add value to the customer experience. By themselves, however, they can't create the emotional attachment that brings true customer engagement. This can only built over time, and comes from creating mutually beneficial relationships with customers.
One of the keys to creating such relationships is to provide customers with direct access to company decision-makers though a feedback management system—one that demonstrates the company is listening to their concerns.
The full white paper "Buying Loyalty: Do Rewards Programs Translate Into Customer Engagement" can be downloaded for free at www.allegiance.com/library.php.
Sales & Marketing Management Magazine
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