Is A Loyalty Program Worth The Investment?

Sydney Headshots; Daniel Sommer Photography; Sydney Headshot Photographer; Daniel Sommer
B&T Magazine
Edited by B&T Magazine

Inflation, the rising cost of living and mindful consumption are placing increasing pressure on brands to attract and retain loyal customers.

B&T recently published research reveals due to inflation and the rising cost of living, some 65 per cent of Australians left brands they were previously loyal to in order to save money and 70 per cent of consumers typically switch products if a cheaper option is available.  

Meanwhile, B&T further reported on Epsilon’s Loyalty Index Report, which shows in the age of mindful consumerism, the pressure is on brands in the current environment to think holistically about capturing the hearts and minds of their customers – not only to attract new ones but to retain old ones. 

Despite these pressures, in the APAC region, there is still a strong appetite for loyalty programs among consumers. According to Mordor Intelligence, 92% of customers are more enticed to shop where a loyalty program is part of the offering.

And for brands, the economic benefits of loyalty can’t be ignored,

  • Customers in leading loyalty programs are worth up to 10x more than unenrolled customers. 
  • The top 5% of a brand’s customers account for up to 50% of its revenue 
  • The most successful loyalty programs drive as much as 7x the business impact compared to average ones 
  • Keeping an existing customer can be 5x more cost-effective than acquiring a new customer 

Beyond economics, however, the best loyalty programs give people a sense of connection and belonging, making it more likely that they will repeatedly engage with a brand. Loyalty programs create a positive feedback loop of growth and retention for the business.  

But not all loyalty programs are created equal, leaving some brands completely missing the mark. 

Not all loyalty programs are created equal 

Everyone knows how important customer loyalty is. But it’s not always clear how to take your loyalty program to the next level. Running a top-of-the-line program starts with building great incentives and rewards, but that’s not enough — there must be a continued focus on expanding membership while also nurturing existing members and enticing back lapsed members. 

Whether a program runs on points, perks, rewards, subscriptions or referrals, it needs to provide members with both value and a seamless experience. And the best way to do that is to use what you know about customers — your first-party customer data — to identify likely new members and tailor the experience to them. Even more, the loyalty program must be consistent across geographic regions, treating all members with the same level of personalisation and perks. 

Take Uber, for instance. The popular ride-sharing app recently made waves for axing its loyalty program Uber Rewards. With four different tiers from Blue to Diamond, customers could work their way up to exclusive rewards like double points on Uber Eats or access to more highly rated drivers. Customers loved it, but not every customer had access to it – those outside the US, Australia, France, Brazil, Mexico and New Zealand didn’t have access to any of the available perks. And that was strike one. 

Strike two was when Uber eliminated its rider-referral program slowly and without warning. At its inception, Uber issued a $20 reward to both the person referring and the one being referred to its program. After a while, that perk went down to roughly 10% of its original amount, with referees getting just $2 or so off their first three rides and then, nothing. For a brand that was built on referrals, customers were, unsurprisingly, confused and disappointed when the perk suddenly vanished.  

Getting loyalty right starts with data. 

Investing in a strong data foundation powered by analytics and insights allows brands to build valuable digital relationships and better deliver personalised experiences at scale. And the leading loyalty programs stand out amongst competitors by doing things differently by: 

  • Orchestrating personalised journeys to activate and measure impact across the customer lifecycle 
  • Identifying the moments that matter, which are all the interactions that solidify a customer’s feelings about their brand 
  • Marketing across channels – bringing the best of the loyalty program to your customers’ preferred channels will drive the best results 

Even more, they keep evolving. Loyalty customers make great cohorts for testing and experimentation. So work within your loyal customer base to drive growth for new products and services, and remember to always include a hold-out group to measure incremental revenue. Or perhaps evolve your program from points to experience, whereby exclusive product drops, premium services and support and next-level incentives that go beyond points and cash back captivate customers and redefine how they interact with your brand.  

How a leading airline brand took its loyalty program to new heights. 

This leading airline has long pioneered the travel industry, moving quickly to embrace technologies that enrich and enhance customer experiences. For example, it was the first airline to offer online booking. And recently, it acquired another renowned customer experience trailblazer, building on a robust tradition of experiential excellence. These choices helped make the airline a leader in an industry that increasingly competes on customer experience over pricing. 

To complement and monetise these strengths, the airline embarked on an initiative to build long-term loyalty through increased engagement with its loyalty program and mobile app. Success hinged on the ability to reach the right customers with personalised, targeted and well-timed promotions for each program. In order to accomplish this, the airline first needed complete and current customer data, unified from its many disconnected sources. 

The necessary customer data existed across six systems, each with distinct teams, permissions and data formats. Rather than engaging in a lengthy and expensive data integration project, the brand recently worked with Amperity to improve marketing performance, build long-term customer loyalty and drive growth. 

The brand sent raw data from each of the six systems to Amperity, without any prior transformations. Using machine learning and massive computing power, the CDP probabilistically stitched together terabytes of data, rapidly forming rich customer profiles.  

Once profiles were formed, the brand used the powerful CDP to create recurring micro-segments, refreshed daily, for non-loyalty members and non-mobile app users. This data was then combined with contextual information about when and where customers were traveling. Afterward, the brand built an omnichannel marketing program to promote loyalty and app downloads. 

The mobile app was offered prior to travel because it provides flight notifications, online check-in and mobile boarding passes. The airline found that customers who used the mobile app reported greater satisfaction than those without it. It also offered its award-winning loyalty membership before an upcoming flight, allowing customers to acquire points that could immediately be used towards upgrades or future travel. 

Using the Amperity dashboard, which displays current metrics about loyalty members, mobile app users and reservations, the airline was able to track the efficacy of the program and course correct as needed. By sending personalised, contextual, and targeted communications, the brand increased its conversion rate by 198 per cent, a primary indicator of long-term loyalty. 

These evolutions don’t happen overnight, but when you break out loyalty programs from an initiative to growth strategy, it’s evident that customers will want to leverage the loyalty program to get what they want from your brand. 

Discover more ways to supercharge your loyalty here. 

Billy Loizou, Area Vice President of Amperity is the author of this article. Loizou has 10+ years of experience in design, technology and marketing. He has worked with some of the world’s most renowned and respected brands, helping them improve their customer experience and drive profitability. 

About Amperity 

Amperity is the leading Customer Data Platform provider that helps companies use data to improve marketing performance, build long-term customer loyalty and drive growth. Amperity’s flagship enterprise CDP is used by many of the world’s most loved brands, such as Alaska Airlines, Endeavour Drinks, Kendra Scott, Kroger, Lucky Brand, Planet Fitness, Seattle Sounders FC, Under Armour and Wyndham Hotels & Resorts. For more information, please visit or follow @Amperity. 

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