Five Steps To Build An Unbeatable Loyalty Program

The growth in positive perceptions and respect for loyalty programs has sparked a distinct shift in how organizations communicate and interact with both employees and customers. Twenty years ago, the industry standard for showing appreciation was gifting a company-logoed pen. While a pen is a fine gift, today incentives have transformed into a valuable marketing and sales tool that encourages engagement, drives brand advocacy and entices audience members with desirable rewards.

Nationwide, there are 3.3 billion loyalty program memberships—an average of 29 per household according to the Colloquy’s 2015 Customer Loyalty Census. Some of the largest and most renowned organizations in the world offer loyalty programs, including Bank of America, United Airlines, MasterCard, Mercedes Benz, MGM Entertainment and Major League Baseball.

The necessity for retaining valuable employees and customers through loyalty programs has become increasingly apparent. Companies that have not yet implemented a program, or are currently not generating desired results from an existing program, need to take action to execute a successful incentive that solidifies customer and employee loyalty.

Understanding Loyalty Programs

There are two main types of loyalty programs: customer and employee. Both types of programs have unique and defining features that work to engage a targeted audience, giving the company a higher perceived value and leading to an increase in ROI and revenue for the organization. These programs function by recognizing members for positive actions and behaviors, and rewarding them with redeemable points that can be used to obtain a specific incentive, such as trending merchandise from top name brands.

Consumer incentive offerings are becoming an industry standard in nearly every market. Today, a vast majority of people are attracted to brands that provide a unique loyalty program. Industry research recently found that 76 percent of Americans think loyalty programs are part of their relationship with brands and 46 percent of shoppers consider them to be an important factor in their purchasing process.

Customer loyalty programs are highly valuable in engaging current clients and attracting new, lucrative sales leads. This type of program incentivizes customers’ involvement with a brand and motivates more frequent transactions. For the customers, it creates a meaningful platform for them to connect with an organization on a more personal level. As a majority of these programs award points for both participation and purchases, customers feel as though they are getting more for their dollar and are valued by the brand itself.

Employee loyalty programs are similar in the sense of creating an engaging and motivating culture, but within the office space. These programs are profitable for organizations as they assist in retaining employees by creating an inspiring and positive work environment in which staff can truly thrive. Employee recognition programs also increase employee engagement, enhance communication across the company and encourage employees to complete tasks in a timely and efficient manner.

Retention and turnover are currently the top challenges for HR leaders, says a new study by the Society for Human Resource Management (SHRM). The strengthening job market has caused a jeopardizing shift in employee retention and has increased the need for employers to incentivize their employees. Companies are now investing more in employee recognition programs as a way to boost overall performance and satisfaction. In fact, the study found that 68 percent of businesses that offer a value-based program saw a significant positive effect on employee retention and workplace happiness.

Find The Program To Meet Your End Goal

Choosing a loyalty program, whether it is customer- or employee-driven, depends on the end objective the company wants to achieve. While customer loyalty and employee recognition programs are the general categories, many third-party incentive providers offer more targeted programs, such as corporate gifting, training, and education and sales incentives.

Deciding what program best suits the company’s needs begins with first looking at what the company aims to achieve. For example, when one of the world’s top telecom companies was looking to improve productivity across its various channels, departments and locations, as well as engage five different generations in its workforce, company executives looked at the solutions that could be achieved through loyalty programs.

Among the problems, the company’s employees worked independently and its workforce was suffering from a below-average score in overall employee happiness, morale and satisfaction. While the company had an employee loyalty program already in place, managers across the different divisions were executing the program differently, causing miscommunication and confusion. The company wanted to unify the programs’ message, strengthen corporate culture and have more effective company communication.

Rymax developed an employee recognition program that was not only tailored to engage a multi-generational audience through proven segmentation tools, but also offered a clear and concise message. The program was a point-based recognition program, custom-designed to drive specific metrics in each channel, location and department.

Employees earned points through both positive actions and behaviors, which included accomplishing goals on schedule and supporting the company’s values. The program’s online redemption platform allowed employees to shop and redeem their hard-earned points for products and merchandise from top-name brands such as Michael Kors, Calvin Klein, Thule, Skullcandy and Voice Caddie.

Rymax also created a peer-to-peer recognition solution to enhance the overall communication across the company’s multiple divisions, as well as improve employee interaction. Both employees and management were able to recognize colleagues with a personalized peer-to-peer recognition badge that was sent through the online platform. Every employee at every level was able to grant recognition, allowing them to pass along encouragement at all levels, as opposed to only management having the power to recognize.

In addition to the internal loyalty program solution, the company also executed an on-site point redemption event that took its employee engagement levels to new heights. The rewards event brought together employees who normally would not engage with one another in the workplace.

The redemption event was designed to mimic a shopping spree, allowing employees to redeem loyalty program points for merchandise in the online rewards platform. It took place in close proximity to some of the company’s largest offices resembling a retail experience with web-based registration and checkout, redeemable points in real-time, food and beverage, product displays, personalized fitting booths and music.

The diverse rewards selection offered at the event included brands like Ray-Ban, Tissot, Cuisinart and Johnston & Murphy. Employees were able to mingle with fellow colleagues and enjoy an exclusive shopping experience that let them leave with some of the hottest products from that particular season, all purchased with their redeemable points. The event generated additional excitement for the employee recognition program and increased employee focus.

Management used monthly reports and surveys to track their improvement in communicating the program to employees and ensured all staff members were using the program to their benefit. After one year, the program generated a 68-percent improvement in employee satisfaction and a 74-percent increase in company communication.

The success of this program was directly tied to remedying the specific, weak areas identified in the planning process. In this case, those areas were improving communication and productivity; any other program would not have generated the same results. For example, if the company executed a more targeted program, such as a sales incentive, it would have only engaged that particular department, rather than the company as a whole.

Five Steps To Successful Loyalty Program Execution

1. Create a list of set goals and choose a program that best meets the company’s desired end results. The planning process is the most important step. It is imperative to implement a program that will successfully and completely meet the company’s expectations. Ask what the company aims to achieve, what the desired metrics are and who it is targeting.

Based on the company’s responses, create a mission statement that highlights the main objective of the program. This will assist in communicating the program to the company’s targeted audience, as well as choosing the program that best suits the company’s goal.

2. Segment the targeted audience. No matter the type of program, whether it is employee- or customer-based, it will need to engage a multi-generational audience. Understanding the defining characteristics of different demographics will assist you in creating a program that gets consistent participation. This process is also important for choosing the most effective incentive offerings to meet generational trends and motivate your audience.

3. Create a simple point system. The functionality of the program should be easy for the company to communicate and simple for audience members to use. The more complicated the process is for people to use their points and obtain products, the less active they will be in the program.

For example, Rymax has created a practical redemption platform that is based on points. Loyalty members can shop on the online rewards site and use points to redeem for trending merchandise, such as the Garmin Vivofit or Narrative Clip. Members simply add items to their checkout, similar to an online shopping site and the product is shipped directly to them from Rymax’s onsite warehouse. The process is fast and easy to use for any audience.

4. Design program elements and select diverse reward offerings. To guarantee longevity, as well as lasting engagement, it is vital to offer merchandise that matches seasonal and current trends. This will entice audience members to redeem their points and stay active in the program.

Also, it is important to plan out specific promotions and unique features, such as peer-to-peer recognition badges for an employee recognition program or tailored reward events for VIP customers, during the execution process. This allows for the company to plan ahead of time and communicate these offers effectively.

5. Measure the program frequently. In order to ensure the program is being used and is working to achieve the company’s goal, conduct frequent surveys with your audience to measure important metrics such as program satisfaction levels, redemption activity and promotion usage.

Paul Gordon is senior vice president of sales at industry supplier Rymax Marketing Services in Pine Brook, New Jersey.