Loyalty programmes are reward schemes designed to encourage customers to return and make repeat purchases. Imagine having a card at your favourite ice cream shop. Each time you buy ice cream, you get a stamp on your card. Once your card is full, you receive a free ice cream! This is a simple example of a loyalty programme aimed at boosting customer retention.
How have they changed?
Old school:
Traditionally, loyalty programmes relied on physical punch cards or stamp cards. You would collect stamps or punches with each purchase, and once you reached a certain number, you could redeem them for a reward. While effective in tracking purchases, this method lacked personalisation and advanced data use.
New school:
Today, loyalty programmes have transformed significantly. According to a September 2022 survey of global loyalty programme decision-makers, approximately 86% of companies now measure the adoption rate of their programmes, and 80% track the incremental sales generated, according to Statista.
Here’s how modern loyalty programmes operate:
Digital Rewards: Many brands have moved to digital platforms, such as mobile apps. For instance, brands like BigBasket and Myntra utilise apps to offer tailored rewards based on your purchase history. This digital approach not only enhances convenience but also allows brands to gather valuable data on customer preferences and behaviour.
App-Based Systems: Companies like Starbucks India have integrated their loyalty programmes into mobile apps, providing features like order-ahead options, real-time rewards tracking, and exclusive offers. This integration improves customer satisfaction and fosters more frequent engagement with the brand.
What Do People Like?
Research indicates that 75% of consumers are more inclined to engage with loyalty programmes that offer personalised rewards. Programmes that use customer data to tailor rewards and communications see higher levels of engagement and loyalty. Additionally, the convenience of managing rewards through apps is highly appreciated, as it streamlines the process and enhances user experience.
In summary:
Loyalty programmes have evolved from basic punch cards to advanced digital systems. Modern programmes use apps and personalised rewards to create more engaging and convenient experiences for customers. With 86% of brands measuring programme adoption and 80% tracking additional sales, it is clear that these programmes are becoming increasingly effective at retaining customers and driving business growth.