7 Principles of Loyalty Marketing

by Jim Berkowitz on October 4, 2010

Here is some excellent advice from the UTalk Marketing.com Blog, 7 Principles of Loyalty Marketing. Check out the complete source article for more on each program aspect:

From time to time we’re asked what makes a good loyalty proposition. Whilst each program should be designed around the unique properties of a brand, it’s customers and the relevant objectives, there are some common elements we use when thinking about different aspects of the program:

1. Subscribe; not bribe – For people to feel motivated they should feel that they are making smart decisions. A loyalty program should not appear as a bribe – something that would taint the brand – and instead should appear as added value which customers want to sign-up to.

2. Loyalty is a journey not a destination – A well designed loyalty program is made up of many small individual behavior changes which link together to create deeper engagement. The program should make it clear what these behaviors are and look to encourage them through the reward and recognition design.

3. Recognition: it’s own reward – Don’t underestimate the value of recognition in it’s own right. A simple “thank you” can be very powerful and for some the mere act of accumulating points can be motivating in itself.

4. Show me the value – Customers need to see a value exchange; they need to understand that their activities are an integrated set of steps to a given goal and that this goal is achievable. However, don’t confuse value with money. Whilst monetary value is important, value can also be achieved through social currency and privilege.

5. Much cheaper to be relevant – Standard mantra for CRM programs is Right Message, Right Time, Right Channel. This still holds true and behavior change can be much more effective when the message is relevant.

6. Facilitate (don’t initiate) advocacy – Take every opportunity to turn the scheme inside out and make it social. Word of mouth is very powerful but it must be genuine and not purchased. Giving people ample opportunities to share means they actually will. With many retailers seeing traffic more than double with the integration of Facebook “Like”, this can be a very powerful mechanic.

7. Create reasons to stay (and stay loyal)– This is not about locking people in, but instead is about ensuring they understand the value they have (and will lose) if they leave. Points do this very well, with people building up deferred value they don’t want to lose.

{ 4 comments }

Mark Sage October 4, 2010 at 12:59 pm

Thanks for the re-post Jim – glad you liked the article.

Watkins October 6, 2010 at 8:51 am

“Show me the value” I fee this is probably the most important point in building customer loyalty.

Wade Cockfield October 6, 2010 at 7:02 pm

From 1 to 7, everything is spot on. Thanks to you and to Mark Sage (principle #3).

Yogendra October 10, 2010 at 9:52 am

very nice article.. simple & truthful.. thanks for sharing the ideas!

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