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What do customers want from a loyalty program?

January 26, 2022 By: Tom Arundel

What do customers want from a loyalty program?

The structure of loyalty programs vary from industry to industry. Overall, people want to feel special and appreciated. The loyalty programs that succeed attract and retain customers by offering special privileges (such as early access to sales) and discounts.

By signing up for a loyalty program with their favorite airline, hotel chain, or brand, customers expect a more personalized experience, which means a superior user experience. 

Loyalty programs come with a number of business benefits as well. Businesses will always need to recruit new customers, but retaining previous customers will save you money in the long run. According to a McKinsey study, as much as 20% of profits can come from loyalty programs.

But loyalty programs are also an effective way to learn about your customers. You can use data from customer profiles and deliver personalized recommendations for your most loyal customer. 

For airlines and hotels, this might be in the form of a vacation that is similar to their previous trips. For retailers, it might be a product recommendation based on recent purchases. 

Here’s a breakdown of what customers want from their loyalty program, industry by industry. 

Building a hotel customer loyalty program.

As leisure travel rebounds in 2022 and beyond, many travelers are debating what to do about their loyalty status and points. 

The lull in travel made it difficult for travelers to meet loyalty status requirements. Brands like Hilton, Marriott, Hyatt, and IHG responded by making it easier for travelers to meet elite status. With Covid-19’s disruption on the industry, it will be advantageous for brands to offer points that never expire, or at least delay the expiration date as more and more people return to traveling. 

So what else do customers want from a loyalty program in the hotel industry? 

First and foremost, they want free nights. They also want perks like better wifi, space-available room upgrades, special rates, and early check-in. Brands can use these perks to incentivize bookings during slower travel seasons. 

The question, for hotels, then, is how to deliver what customers want in a well packaged user experience?

Segmenting your guests.

For hotels, offering recommendations that are personally tailored to each traveler is key. 

Business travelers are probably more interested in hotel events like happy hour, or access to amenities like spas and gyms. They want free drinks at the bar or free snacks in the room. Families, on the other hand, would be more interested in bundles related to theme parks. 

And you should also reward more loyal customers with extra perks. This can be accomplished by offering a tiered system of loyalty rewards. This way, customers in the lower tiers can still work towards climbing the loyalty ladder, while customers in the top tier feel extra valued. 

Mobile first.

Having a mobile app that allows travelers to keep track of their points and rewards is crucial. Today’s hotel guests want to redeem rewards right from their phones, with the help of clearly labeled dashboards. 

To build a standout mobile experience, hotels need to leverage data to deliver what guests need. This data can come from guest profiles in CRMs and property management systems. But it can also come from quantifying the impact of design choices by analyzing how users engage with digital products, with the help of platforms like Quantum Metric.

Frequent flier programs in the post-Covid world. 

Billions of dollars in revenue has been generated by frequent flyer programs alone.

But, like hotels, airlines have been reimagining their business models in the aftermath of the pandemic. As Quantum Metric CEO Mario Ciabarra wrote last year, the airline customer journey map has changed dramatically. Leisure travel is reaching new highs, while business travel is coming back at a slower pace.

In the past, frequent flyer programs depended on business travel. These programs thrived on people who were flying multiple times a week for work.

To succeed in the post-pandemic world, airlines will need to continue optimizing, strengthening, and scaling their loyalty programs.

Here’s how.

Take care of needs, but pamper with extra perks.

To hook new customers, airline programs should offer a sign-up promotion for spending a certain amount of money in a certain time window. The reward? Free flights. But that’s just scratching the surface. 

Also like hotels, airlines should offer a tiered system. While offerings vary from airline to airline, loyalty programs generally provide some form of priority boarding, free checked bags, seat upgrades, special boarding lanes, in-flight facilities like Wifi, free seat reservations, lounge access, perks with partners, and more. 

Outside of the flight itself, frequent flyer programs will need to offer different sorts of perks. They need to continue incorporating benefits from hotel chains, car rentals, taxi services, restaurants, and other services. 

Designing the loyalty program.

There are so many components that go into a frequent flyer loyalty program. 

For airlines, this means offering a standout user experience across all channels, including mobile, desktop, and airport kiosks. The user experience should clearly communicate perks, as well as allow you to redeem miles for flights and other services with ease. 

Since loyalty programs are a major source of revenue, airlines need to ensure that the user experience is as close to flawless as possible. 

Customer loyalty programs in the retail industry.

The pandemic brought different challenges for retailers, including the shift to eCommerce and out-of-stock challenges, thanks to ongoing supply chain issues

Customer loyalty programs in retail, however, can help brands overcome these issues, even when beloved items are not available. Loyalty customers or customers that log in typically have a higher conversion rate and higher lifetime values. 

There’s no question that retailers see both short and long-term benefits from having more loyalty customers. So what do customers want out of a loyalty program?

Make customers feel special.

Retail customers are looking for discounts and sales, sure, but they also want something special. This might be freebies, cash back, birthday gifts, custom rewards, or free cosmetic samples. It might be early access to sales, new products, exclusive in-person experiences, or, as made popular by Amazon, free delivery. 

More importantly, however, retail loyalty programs can encourage customers to interact with brands in new and exciting ways. Customers should be able to earn points for spending money, as well as for sharing on social or leaving reviews. 

Personalize, personalize, personalize!

Creatine customer profiles is one way that retailers can better personalize the customer experience. 

Like hotels and airlines, retailers can use customer profiles to segment consumers into groups based on sales, engagement, and other factors. 

The result? Better offers and recommendations, tailored to each individual consumer.

Gamify the shopping experience.

For many people, online shopping is an important pass time, on par with playing video games and interacting with friends on social media. 

By creating a system where customers earn points and unlock rewards, incentivize customers to purchase more, increase engagement, drive brand loyalty, and grow customer lifetime value. 

Customer loyalty programs for QSRs.

There’s no question that loyalty guests spend more money per trip at quick service restaurants (QSRs). The pandemic prompted QSRs to double down on mobile and online ordering, which has laid the foundation for building out customer loyalty programs. 

Starbucks, of course, paved the way for such programs when it launched its Starbucks Card mobile app in 2008. 

The Starbucks rewards program has been a case study for other QSRs: the size, channel options, and data captured from the program enables the coffee chain to make business decisions that will benefit large segments of customers in the long run.

To enhance the customer experience, Starbucks has embraced features like gamification and artificial intelligence. Starbucks for Life, which launched in 2015, and Bonus Star Bingo, gamified the coffee drinking experience by enabling customers to collect points. With the launch of the Starbucks My Barista chatbot in 2017, customers were also able to start ordering coffee with voice commands. 

Perhaps the feature that stands out most, however, is real-time personalization. The Starbucks app has been leveraging member data to deliver personalized offers at opportune times, such as providing discounts when customers are near a store. 

All things considered, it’s not surprising that the rewards program drove 40% of overall sales in 2019.

The future of loyalty in QSRs.

Well known QSR brands like Burger King and McDonald launched loyalty programs in 2021. 40% of QSR customers don’t use loyalty programs, but that number is changing, especially thanks to the industry’s rapid adoption of mobile.

Enhancing the loyalty program experience with Quantum Metric.

With Quantum Metric, digital teams across hotels, airlines, retail, and QSR can detect conversion blocking issues and customer friction points before they impact a large number of customers.They can use tools like session replay to understand “the why” behind the problem. Finally, they can quantify the business impact of the problem, which helps teams to prioritize how they improve the user experience. 

Can we also talk about how QM can help brands:

  • Drive higher engagement with a loyalty program by determining how/why customers are signing up, issues with sign up or log in, and more.
  • Understand differences between loyalty and non-loyalty customers and determine which features

Your loyalty customers are the ones that are most committed to your brand. Your user experience should reflect how important they are to your business.

Interested to learn more about other loyalty programs in retail, QSR, and the travel industry? Join our discussion about the changing retail landscape at our annual virtual conference Quantum LEAP on Feb 8-9, 2022.

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