[ G E T T I N G S TA R T E D ]
Before even considering investing in a loyalty
programme, there are basic considerations to take
into account, according to Jake Orpen, managing
director of insights agency Nudge.
“Businesses should consider other aspects of basic
customer management and the overall experience,”
he says. “For example, think about your relationship
with your cellphone provider. Do you really care
about a loyalty programme when there are more
important things affecting your loyalty, such as
price, service, a call centre that can actually help, a
bill that is actually correct or even a phone in stock?” On the “earn” side of the programme, the brand
needs to ask whether customers will be prepared
to shift their behaviour, and how many points are
needed to do so. On the “burn” side, consideration
should be given to customers’ preferred redemption
options, including cash, discounts, products,
services, VIP status or better service.
Of course, not all businesses have the internal
expertise to establish these programmes and they
may need to rely on external help.
“We set up our programme ourselves,” says
Foster, “but we are supported by external
specialists. For other organisations,
I recommend that even if you use external
advisors, it’s always a good idea to have some
internal capability who has your organisation’s
best interests at heart, and has to live with the
outcomes of the strategy once implemented.”
On the other hand, Burnstone recommends
contracting the experts rather than starting from
scratch internally – unless there are people on your
team who have experience from elsewhere.
“Once you invest in a programme,” he says, “you
will create negative goodwill if you pull it, so you have
to get your numbers right and your strategy right, so
it’s worth getting in consultants. Lots of brands try to
do it internally, but meet with mixed success.”
However, he echoes Foster’s sentiment when he
says, “but you should also grow capacity internally.”
BUILDING THE PROGRAMME DOES THE PROGRAMME DELIVER?
Orpen says there are two cornerstones of every
loyalty programme – how customers earn points
and how they burn points. Once the programme is established, it is vital that it
delivers on its objectives and continues to evolve. “While
customers are being rewarded for engaging with and
buying the company’s products, they also want that
personal touch, so relevance is key,” says Foster.
Burnstone argues that it is also worth
considering reasons that a programme might
not work, which include cultural misalignment
with the business; a large organisation working
in different silos and trying to drive different
behaviours, so that a group-wide programme might
not speak to all requirements; poor staff buy-in;
not giving enough away to drive meaningful
behavioural change; or customers believing the
programme is just an opportunity for spam.
However well the programme might deliver, all
the experts agree that it is never acceptable to rest
on your laurels. The programme will need to evolve
and reinvent itself to stay current – both in terms of
the customer’s needs and the business’s.
“You’ll need to conduct day-to-day listening
to your customers, run research, carry out focus
groups, understand their preferences, and review
your programme on an annualised basis to establish
whether the numbers make sense,” says Simões.
“But also bear in mind that people don’t like change,
so if you’re reinventing it, make sure that you are
also making it more meaningful.” ■
GET THE BRAND RIGHT BEFORE
REWARDING
WHY ESTABLISH
A LOYALTY
PROGRAMME?
According to Jake Orpen, MD of Nudge, there
are typical objectives for organisations
launching loyalty programmes:
• To retain customers or reduce churn;
• To increase usage (recency, frequency or
value of spend);
• To drive customer referrals;
• To create a platform for upselling and
cross-selling products;
• To alter behaviour (e.g. Vitality
encourages you to eat better, gym,
manage your stress); and
• To acquire demographic data, personal
data, product usage data.
78
R E WA R D S & L O YA LT Y S A
TEN GUIDELINES
FOR DESIGNING AN
EFFECTIVE LOYALTY
PROGRAMME
According to Amanda Cromhout, founder and
CEO of Truth, these are the key features of a
well-designed loyalty programme:
1. SIMPLE
• It must be easily understood by customers.
• It must provide a seamless
customer experience.
2. TRANSPARENT
• No hidden or complicated rules.
3. SUSTAINABLE
• Can it continue operation into the
foreseeable future?
• Will it be successful?
• Will it attract members?
4. REWARDS BEHAVIOUR
• Does it reward the behaviour you seek?
• Will it drive the behaviour set out
in your strategy?
5. INCLUSIVE
• Is it open to all customers?
• Do they have to pay for membership?
6. HOLDS BRAND VALUE
• Does it match your brand value?
• Does it meet your brand requirements?
7. LOVED
• Is it loved and understood by your staff?
• How do your frontline staff react to your
programme? Do they believe in it?
8. REWARDS
• Does it offer meaningful rewards?
• Are your rewards perceived as valuable?
9. DATA
• Does it collect data?
• Does it use your customer data to drive
insight and value?
10. PROFIT
• Does it drive incremental sales and profit?
In the print edition of Sunday Times Rewards &
Loyalty SA, this sidebar was incorrectly attributed
to Steve Burnstone, CEO of Eighty20 in the
magazine. We regret the error, and apologise for
any confusion and inconvenience caused.
Steve Burnstone, CEO of Eighty20, advocates
international research as well, as South Africans
will soon follow global trends. Millennials in
particular, he says, are interacting differently with
brands, and brands ar