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The Complete Guide to Customer Loyalty

  • How to propel your business growth with a loyalty program?
  • How to ensure long-term success with loyalty-driven incentives?
  • Learn the best practices of all successful loyalty programs.
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All You Need to Know About Personalized Customer Loyalty Programs

Julia Krzak
Julia Krzak
May 22, 2020
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All You Need to Know About Personalized Customer Loyalty Programs

Why is personalization important for your customer loyalty program?

I have never been a jewelry person, but some time ago, I decided that I’d like to get a nice necklace for a friend’s wedding. I went, I bought, and I forgot – why? The shop assistant was nice, the whole experience was more than positive, so positive, in fact, that I agreed to share my phone number to get exclusive deals. But, I have never come back to the store. Why?

The company failed my expectations when it comes to offering me deals that are in any way relevant to me and my individual experiences. Call me narcissistic but receiving several messages a week with open-for-all 10% and 15% discounts didn’t work for me. So, I ignored them. Perhaps, if the company connected with me through more targeted promotions, I would come round and be dripping in gold jewelry at the next wedding? Or even better, perhaps the company would garner my attachment and become my trusted source of everything that sparkles? Sadly, we’ll never know. But your business can definitely do better by following one of the top loyalty marketing trends for 2021 – customer-driven personalization.

If you’d like to learn more about personalization as a marketing tactic, we wrote a whole post about it here.

Today, loyalty programs and, truth be told, all marketing is about offering customers something unique and special – something created just for her or him. Tailor-made reward programs, so the ones that consider the individual customers’ needs, interests, preferences, and so on, are the key to winning their hearts, trust, and wallets.

As a customer loyalty software provider, we have seen our share of loyalty programs created by our customers. We continuously develop new functionalities to make it easier for our clients to personalize their promotions. Here is a quick rundown of things that we have learned along the way when it comes to personalizing your incentives. For a longer version, scroll down, but if you’re in a hurry, check out the list of personalization tricks you can implement right now:

How to create a personalized loyalty program?

  1. Consider launching a mobile loyalty application.
  2. Strive for innovation and original loyalty patterns.
  3. Offer multiple ways to earn points.
  4. Ask customers what they would like to get for taking part in the reward program. 
  5. Come up with the loyalty personalization strategy first.
  6. Create personalized dashboards for customers to check loyalty level and exchange points for perks. 
  7. Invest in a Customer Data Platform that will help you leverage customer data flowing from various touchpoints. 
  8. Introduce loyalty tiers to differentiate between more and less engaged customers. 

And here comes the longer version:

1.Launch a mobile loyalty app

“Do you have our app?” Don’t lie. We've all heard this phrase more than once at the checkout. Recent years have brought a literal technological revolution to how loyalty schemes are run. With the market full to the brim with the competition, mobile applications allow you to get to the bottom of your customers’ needs by providing a quick, convenient and straightforward form of making purchases, collecting points, and earning rewards. So convenient, in fact, that customers carry it at all times in their pockets. You can also use the loyalty app to collect real-time data on customers’ behavior and purchases (of course, after asking for their consent first. GDPR, I am looking at you).

By designing your app's look and feel to reflect your targeted audience’s preferences and personalizing your messaging (e.g., including customer’s first name in the messages or wishing them happy birthday), you increase your chances of success with personalizing your loyalty channels. On the topic of messaging, please don’t spam customers – a message that’s not targeted at anyone and just sent into the aether is a waste of resources.

So, if your targeted customers are digital natives, tap into the new loyalty technologies and launch a loyalty app for your program, and use channels that your customers feel the most comfortable with. You can check our Sephora Beauty Insider loyalty app for some inspiration.

Sephora Loyalty Program – Example of Loyalty Personalization
Source: Sephora

Further reading:

There is an obvious developmental cost involved in the launch and maintenance of a dedicated loyalty app. If you are a smaller brand, just starting with loyalty programs, you can surely run a web-based loyalty scheme with mobile messaging channels or mobile redemptions (Voucherify offers a dedicated app for handling redemptions, it is also a free scanning device). The key to success is seeing which channels customers prefer and then focusing all your marketing efforts on them.

2. Remember that gamification pairs well with personalization

New technologies also open a field for customizing the mechanisms behind your loyalty scheme. This includes gamification and going beyond the point-based model of loyalty program that we are all familiar with. And which, mildly speaking, can be dull for more demanding customers. The introduction of gamification into your loyalty scheme significantly increases the engagement of the participants. But what does it mean in practice? Well, you can gamify your loyalty scheme via custom tiers, loyalty levels, specific activities that grant points, or original rewarding criteria, e.g., granting double the number of points for some activity in a limited timeframe. This system allows you to reward customers not only for making purchases but also for carrying out concrete tasks, which brings me to the next point.

See what gamification is all about – Psychology of Gamification explained.

3. Make sure that there are multiple ways to earn loyalty rewards

The formula of making X number of purchases for X number of points is not enough anymore. Of course, incentivizing purchases is the number one goal for most businesses, but it does not mean that you have to resign from encouraging any other form of customer activity. To put things straight, the loyalty program is not for you; it is for customers. So let them own it and use it as they please – but within certain limitations. Check out our guide to fraud-free loyalty programs here.

What to reward customers for?  

Reward customers for other things than purchases. Here are some ideas of what customers can do in exchange for loyalty rewards:

  • Leave a review.
  • Refer a friend.
  • Tag your brand on socials. 
  • Take part in the local event.
  • Participate in your photo contest.
  • Fill out a customer service questionnaire.
  • Subscribe to a newsletter.

All of the above points depend on the type of business you are running. For example, if you are a bike-sharing company, you can reward customers for riding a bike for over an hour. In fact, we have a case study from such a case. Go here if you're interested in learning more.

By customizing rewarding actions, you are personalizing your program to suit customer’s preferred ways of interacting with your brand.

How to customize the reward triggers?

Now you may ask, how can I track these events and use them as reward triggers. There must be a huge hidden developmental cost behind it, right? Not at all. Voucherify offers custom events functionality out-of-the-box, which allows you to reward customers for performing selected actions. However, building such technology from scratch would obviously consume time, money, and resources.

Follow our post on essential tips to building loyalty software from scratch.

4. Let customers choose preferred rewards

This point is closely linked to the previous one. If you are going to allow customers to choose what they want to do in exchange for points, you have to give them a choice in the area of selecting rewards as well. Here, the world is your oyster – you can reward customers with incentives, material products, tickets for events, or spa sessions. Just experiment, or even better, ask customers directly what they consider valuable and good enough rewards for participating in your program.

Besides giving customers a choice of what they want to get, you can also personalize loyalty rewards further. Sephora is a great example of that (again, I promise it's not a brand deal) – the company allows customers to customize the rewards (e.g., make-up bundles) according to the customer's hair and skin colors. But be careful not to overburden your customers with too many options – striving to get the best option possible can make some customers anxious and unwilling to make any choice at all. We wrote about the Choice Paradox here.

Multiple rewards schemas are yet another challenge for your loyalty software. The support and maintenance of many different incentives is not an easy task. Yet, it is essential for the success of your loyalty scheme – only then your marketing team can find the best loyalty incentives that offer the biggest ROI through experiments.

5. Come up with a rewards program personalization strategy first

Customers love the feeling of being noticed and appreciated by the brand. It is worth remembering the old marketing principle saying that a message to everyone is a message to no one. That’s why you should create every loyalty strategy with targeted audience preferences in mind. Obviously, personalizing loyalty offers on a 1:1 basis is tough and likely impossible for most brands with limited resources – but you can personalize your loyalty offer and strategy according to whole target groups – women with children, pet owners, or single middle-aged men.

A carefully tailored loyalty strategy is the foundation of any successful loyalty scheme – it is a bitter pill to swallow, but you cannot target everyone. That is what the jewelry shop I described in the introduction did and why it failed to convert me into a returning customer. User research and finding out the program's business objectives are a must for everyone involved in creating a personalized loyalty program. Without knowing customers' needs and behaviors, you won’t be able to personalize your loyalty incentives correctly, and therefore you are bound to fail in meeting customers’ expectations.

6. Give customers a dedicated and personalized space

Be it a mobile app or a dedicated website, giving customers a dedicated space to track their progress and exchange points for rewards is always a good idea. It will not only take the burden of answering a thousand questions off your support team but will give customers the power to freely juggle their points, browse rewards, and get them with one click. That’s why Voucherify created customer cockpits that act as private customer spaces.

Loyalty Program Personalization – Customer Cockpits

With the right tools at hand, creating such personalized loyalty dashboards or homepages should not be too complicated. You can also think about giving some power back to customers, allowing them to upload their own background image, change the profile name, the time zone, and other details.

7. Personalize with customer data

Relevant and updated customer data is like fuel to loyalty programs. Sorry for the cliché metaphor, but that doesn’t make it any less true. If you cannot collect, process, and apply data to your loyalty program, there can be no talk of personalizing it. This is why it is so important to use proper technology to gather, crunch, and leverage customer data to not only meet customers’ expectations but also to always be one step ahead. You can extract data from social media, website and app analytics, customer touchpoints, transactional data, call center data, and many more. Juggling all this knowledge is not a light burden, but Customer Data Platforms can help. One example of such a platform is Segment.

Here you can read the post about how data coming from Segment can enrich your marketing campaigns.

But, here comes the bummer. Modern customers are aware that their data is a currency, and they won’t exchange it for poor quality loyalty programs and shady incentives. Also, in the post-GDPR-era, you have to be extremely transparent about collecting and using personal data. But there is nothing to worry about as long as you run an honest business (which I hope you do, duh).

8. Differentiate participants by introducing loyalty tiers

It’s sad but true that not everyone is going to be an extremely engaged devotee of your loyalty program. And truth be told, there’s nothing you can do about it – some customers will drop by and say bye-bye quite fast. You can create tiers to offer better rewards for customers who have delivered more value to your brand than others. By introducing levels to your loyalty program, you are also gamifying its formula, which in the long run makes it more attractive for potential participants. This way, you can not only differentiate different levels of brand affection but also build tier-specific rewarding criteria, e.g., offering double the number of points for referring friends to customers from a Premium tier.

You can check here how loyalty tiers operate in Voucherify.

How to choose personalizable reward programs software?

As I suggested earlier, nowadays, it is impossible to run a reward program without a proper technology stack in place. Here is a quick rundown of things your customer loyalty software provider of choice should support if you are going for high-level personalization of loyalty solutions:

  • Multiple Incentives and Rewards (e.g., coupons, material products, free shipping, referral codes, etc.) – code-wise, this means that the platform shouldn’t be tied to a few fixed reward types as developers will need to get involved every time the marketing team comes up with a new incentive idea.
  • Original ways to earn rewards and functionalities that limit customers’ eligibility – here, a flexible redemption rules engine and CRM functionalities are a must. With this in place, every time the reward is being applied, the software checks if a customer is eligible to really get it.
  • Dynamic customer segmentation – your rewards software should have functionalities you’d usually find in the CRM systems. Plus, you should be able to integrate it with your CRM.
  • Timing of incentives – by personalizing the timeframe of your rewards program or launching time-limited loyalty solutions, you make your program more engaging.
  • And many more.

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Summary

These are just some ideas on introducing a higher level of personalization to your loyalty programs. We believe that personalization starts from a proper technology stack, a great customer loyalty software in place. Once you have that basis, you can build your marketing strategy on top of it.

Voucherify is a Headless, API-fist Customer Loyalty Software that allows for maximum personalization of the loyalty program, from rewards, through earning rules and loyalty levels to communication personalization: landing pages, messages, and distribution channels.

If you are still hesitant whether your team can build personalizable reward programs on your own, why not check the solutions already in place?

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Are you ready to launch a personalized loyalty program?

Let’s talk

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Julia Krzak
Content Development Specialist supporting the marketing team and content creation. Obsessed with all things modern marketing. Loves gaming and reading.
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