Analysis of the data we are using for our soon-to-be published report on loyalty/reward programmes has yielded some very interesting insights about exactly how these programmes work.

The bottom line is that they work extremely well. Here is a brief overview:

  • These programmes strongly engender loyalty in the sense that there is a definite statistical correlation between frequency of usage of a brand or service provider and ownership of their loyalty/rewards programmes. Loyalty/rewards programme members are far more likely to be most often users of a brand or service provider than those who do not belong to the programme.
  • In this sense loyalty/rewards programmes do engender loyalty. People respond to being rewarded for their custom, but there’s much more to these programmes than the mechanism of simply kicking back a percentage of the member customer’s spend.
    Effective loyalty/reward programmes work exactly like clubs. Aside from the obvious kickback mechanism, they afford special and varied privileges to club members like opportunities to win prizes, preview new ranges, get interesting curated news and information and access member-only special deals – not only discounts on stock items but special offers on other things too like insurance, holidays and anything else you can imagine. Some programmes do better than others at leveraging their programme in ways like this.
  • Clubs like these enable the brand or service provider to engage with customers on an ongoing basis in many different ways and to develop meaningful and personalised relationships with customers. In the digital era which is busy putting traditional media to the sword, a club like this is almost an essential for any and every brand or service provider.
    Because of the ongoing engagement, club members are also far more likely to rate a brand or service provider much higher on offering good value for money than those who are not members. In fact, club members are more likely to rate the brand or service provider much higher on all other attributes relating to things like range appeal, service delivery, quality, aesthetics and the rest.