When I hear the term “loyalty program,” I immediately think of the many loyalty cards in my wallet and how I have to fumble around to find one when the cashier asks,
“Do you have a so-and-so reward’s card?”
Boomers (40%) don’t find loyalty programs as essential as Millennials (62%) and GenXers (64%) (Chase)
I will admit it, I consistently use my grocery store rewards (saves me 20 cents a gallon on gas), hotel points, movie rewards card ($5 Sundays!) and there is a diner near my office where I have about 6 different cards with 3 or 4 stamps on them. Free lunch is almost mine!
56% of Millennials , and 50% of Gen Xers, wanted to use apps as the preferred medium for restaurant loyalty programs. (Oracle Hospitality)
The one that seems the most genius to me is the Sephora loyalty program. I don’t even want to admit how much it cost me so my wife can maintain her VIP status. Then next year guess what, it starts all over!
I have a really hard time with airline rewards, though. It seems like it takes forever to gain any kind of major reward, like a free flight or an upgrade to first class. Either that or I really just never understand them.
• 72% of those ages 46-65 will redeem reward points earned from business travel for leisure compared to 86% of millennials. 48% of Millennials consider loyalty programs to be important when booking flights and 51% when booking hotels (Expedia)
While these kinds of loyalty programs are a dime a dozen and are designed to get customers back into stores or back up in the clouds, the areas where I find the most return on investment (ROI) is with loyalty programs offered by banks and credit card institutions.
When a customer is part of a loyalty program for a credit card, there is an investment of time, energy and even emotion in that credit card company. And for that reason, customers stick around and keep using your credit card.
Credit Card Loyalty Programs
For people who love to travel like I do, some credit cards offer amazing loyalty incentives. Basically, the more you use their card, the more you can travel, especially with flexible rewards. One of these cards is the Chase Sapphire Preferred Card. This card racks up traveling points for every $1 you spend — even while you’re traveling! This program also comes with a sign-up bonus of 50,000 points after spending four grand in the first three months after opening an account. That comes out to $625 toward travel. Wow. I’m feeling pretty loyal.
Loyalty Programs for Banking Institutions
Besides offering free checking, banking institutions need to offer loyalty incentives to remain competitive in their industry.
For example, Bank of America’s rewards program actually offers three levels of rewards, which makes it fun. These tiers are based on combined balances of qualifying accounts. As your balance(s) grow, so do your rewards. Now that is clever incentive to continuously do business with Bank of America.
Why use Loyalty Programs?
In order for loyalty programs to succeed they need to be tightly integrated with the brand story and customers shopping experience, offering a seamless experience across the buying experience. As shoppers we use the Internet, mobile channels and physical stores, businesses need to recognize that.
Loyalty programs offer an incentive for the customer to continue to purchase a product, keep using a credit card or continuously deposit money into accounts with the same bank.
They generally cost less to implement then a larger marketing campaign and since they reward real customers, the ROI is easier to recognize.
To learn more about implementing a loyalty or rewards program for your company and see an amazing ROI, contact one of our offices.