It is Christmas time and everyone is collecting those customer loyalty points at your favorite store. How many little plastic cards are on your key chain? Grocery stores, pharmacies, gas stations, restaurants, hotels, airlines...each has a reward system designed to keep you coming back. Points, discounts, and free products encourage your loyalty. The loyalty model has been a successful business tool ever since American Airlines introduced the first mileage plan in 1981. How successful? According to Colloquy Research, The average U.S. household now takes part in 21.9 loyalty programs every year.

While loyalty programs are not going to disappear, the future of customer loyalty can be seen in two trends that will reshape the way they function.

Mobile phone apps

No more little plastic cards. And lots more personalized offers, based on data about individual preferences. Discounts delivered automatically to the mobile phone. Consider these programs already in place:

  • Starbucks has had a successful loyalty program since 2008, when customers could register a gift card and receive free soy milk, internet access, and refills on drip coffee. With the mobile app, launched in early 2011, customers now get discounts when they pay with their app, and automatic calculations of points. By 2013, over 10% of all Starbucks purchases were done with the mobile app.
  • WalMart and Walgreens use apps to make personalized offers to shoppers as they're in the store.
  • American Express recently announced a partnership with Uber, the taxi service company. Under the program, when customers pay with AmEx when using Uber, they earn twice the AmEx rewards points--and can use those points to pay for future Uber rides.

Customer experience

Everyone likes to feel important. Nordstrom has known this for decades; each customer is treated with respect and unsurpassed service. The challenge of building loyalty by providing an exceptional experience is that every customer is different: Different style, different budget, different needs. But, figure out how to listen to the customer, and authentic, lifetime loyalty is established. Here are a few examples of positive customer experience:

  • Apple stores are known for their inviting way of letting customers "play" with the products. Associates--who are not paid with commissions--are available to explain the products and teach, on the spot. Customers can request as much assistance as they need, or none at all. It's a positive experience, every time.
  • Disney parks are the ultimate family vacation, because guests are always treated to a warm, friendly environment. Each interaction, from character to groundskeeper, is perfect. People return, well into adulthood, to recapture the "magical" feeling.
  • Harley Davidson has created a loyalty for motorcycle fans that is unmatched. Customers can build their own Harley; participate in events; wear "Bad never looked so good" clothing. By establishing a prestigious lifestyle loyalty program, customers will never go anywhere else.

So, those little plastic cards? They have been useful, but look for improved versions to build stronger customer loyalty in the future.

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Published on: Dec 10, 2014
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