Most Effective Loyalty Program

Conusmer needs is a fundation of marketing. It is essentially a process of constantly asking questions as well as answering questions.  Usually, consumer needs is discoverable and definable, which means there are excisting needs or potential need here, marketers have to dig them out by distilling tons of information and messages. This is what we call consumer insight, which is able to define consumer functional and emotional needs so that could guide marketers’ decision on product development and brand building.  

However, marketing decisions have been very difficult to make as consumer needs has become a more complicated model that consists of many differen commercial and social dimensions. Bascially, it falls into three main marketing actions: recuirment, conversion, and retention.  Every step in these marketing actions involves tons of consumer’s decision driven by whatever their individual or social needs.  But what if there is no consumer needs in one of these actions, or they don’t even know whether they need or not.  Obviously, those sophisticated businesses and their marketing teams would resolve consumer needs for recuirment and coversion by answering why consumer need my products/services? And to build reason why(RW) and reason to believe(RTB) as a fundation of product.  But how to keep them continuously using products/services? How to make the consumers that were very hardly enrolled and converted to stay loyal in my product/services?

Those defined RTBs are no longer mainly responsible for this type of retention questions. Therefore, loyalty programs were necessarily developed to resolve the problems of consumer needs. Frankly speaking, the needs of loyalty programs was not defined but created. By conditionally rewarding consumer for their more purchases, compaines want to lock its consumers in the loop of its businesses or business alliance.  Consumers intitally have no needs for loyalty programs, but their needs was created by companies that want to give consumer a reason or some reasons to stay with their products/services/solutions.  Those reasons, in early year of loyalty rewards programs are not ramdomly chosen, but are strategically created to cater consumers.

1. Products/services have competition issues rather than their own issues, which means consumers needs for the products are still there.
2. There is no siginifcant difference for consumer to switch between my products and competitor’s products. In the other words, it’s hardly for consumer to identify the difference between products in the market.
3. Accumulative efforts end up with an attractive benenfit. It psychologically stimulate consumers by setting a not easy but achievable goal, which makes the loyalty program more meaningful and valuable in terms of length of time and consumer’s achievement.
4. More variance and diversified offers are provided consumers with different benefits to meet their needs, but sometime those so-called “needs” are activated.

Although it just try to lock consumers to stick with its stores, every single store of retail industry offers many different goods for the loyalty rewards programs. However, sole retail franchise loyalty programs is no longer so appealing to consumer because of several reasons as follows:

1. One kind of benefits could not safisty consumers with their raising needs.  The bar was created and would definitely be raised. The consumer delight prorgams have become consumer satisfied programs.
2. Lacking innovation of benefits. Sometime businesses create something for loyalty programs without meaningful consumer needs. Simlpy consumers’ information collection could not help with segmentation.
3. Not use friendly in current dynamic. Many of those loyalty programs have to involve a complicated using process, which cannot fit into current the mobile internet dynamic. For example, most of membership cards are not able to make payments or even cards are no longer accepted by consumers.
4. More difficult to maintain consumers’ loyalty in such a competitive and fast online business environment. Traditional retailing has been suffering from eCommerce for a while.  Online shoppoing reduces consumers’ loyalty.

Therefore, cross-over loyalty programs have emerged in the market. In the alliance of retail industry and banks, they both successfully resolve the problems above. On the one hand, retail companies get more accurate information about consumers and more convenient transction tools, which would lead more accurate consumers’ shopping behavior tracking, driving more meaningful loyalty programs for their consumers.  On the other hand, banks could enhance supply side scale of econimic for their financial product, which actually are one type of loyalty rewards programs, such as credit card. The more different benefits cross different categories one bank offers, the higher the value of the loyalty program would have and the higher willingness consumers would buy in.