The Next Evolution of Customer Retention Programs
Customer retention programs, or loyalty programs, have come a long way since their inception. Programs that were once seen as the “next big thing” include Subway’s Sub Club, a stamp-based loyalty program, and Betty Crocker Points, which customers could earn by purchasing Betty Crocker products and redeem for rewards. Today’s loyalty programs are far more advanced because they can be tailored to suit each customer’s behavior and preferences.
Yet, despite significant progress, customer retention programs still need to evolve and improve. According to Colloquy’s 2011 Loyalty Census, there were approximately two billion loyalty program memberships in the US in 2010 but only about 46% of those memberships are active. The low usage of loyalty programs stems from the fact that loyalty programs are becoming a commodity and aren’t meeting customer expectations.
An increasing number of consumers want more for less, so companies have had to enhance the capabilities of their customer retention programs and provide members with more value in order to stay afloat. Even more established customer retention programs have had to evolve in order to keep up with customers’ demands.
Creating More Relevant and Targeted Offers
Customers have lost patience with irrelevant promotions and want brands to use their personal data to create more relevant and targeted offers. As the market evolves, customer retention programs will have to deepen their understanding of consumer behavior and improve the way they segment customers. Companies will have to redefine the currency of their loyalty programs to ensure that repeat business is profitable for them in the long run.
Rewarding Brand Advocacy
Customer retention program rewards have long been linked to purchase behavior, but nowadays, even light customers can be worth more to brands than regular customers if they are major brand advocates. In the social media age, individual consumers have the power to influence others. Customer retention programs will continue to evolve so that not only consumption behavior, but also brand advocacy, is rewarded.
Partnering with Other Brands
Today’s consumers are hungry for more reward options, so a growing number of companies are partnering with other brands to provide customer retention program members with a wider selection of rewards. The key to forming successful partnerships for customer retention is ensuring that different segmentations of customers are able to earn the rewards they prefer.
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