What Makes a Good Loyalty Program?

In my last post I spoke about the Woolworths Rewards loyalty program and where it missed the mark as far as loyalty programs go. I thought I would continue on with that theme and look at what makes a good loyalty program

Almost all retailers have a loyalty program, you could say it acts as a guarantee of future purchases by customers. But what makes us want to join a loyalty program? Is it that we love the brand and want to be kept updated with product information and sales? Do we want to earn cash back or earn points that can be redeemed for products. Whatever the reason we are a population that loves a reward. 

In 2013 the Australian Marketing Institute conducted a study of loyalty programs. They found that 88% of consumers over the age of 16 were part of a loyalty program and 11% of consumers were members of more than 10 programs. 

That is a lot of customer data being made available for marketing purposes. So what makes us join and remain loyal to these programs? With so many programs out there how do you choose? Do you want membership to be free or are you happy to pay a membership fee knowing that the rewards will far outweigh any investment?

A common opinion is that a loyalty program that offers the opportunity to move up membership tiers is quite successful. A perfect example of this is the Qantas Frequent Flyer program. When you join you are on the bronze membership level. Now while you accumulate points whenever you fly or spend money at an affiliate, the real value is in accumulating status credits. Status credits can only be obtained by flying and depending on your destination that will determine how many status credits you earn. Once you have earned 300 status credits you go up to the Silver membership. This is where Qantas is smart. In addition to seating privileges and 50% bonus on your points,  as a gift for achieving Silver status, they give you two passes to the Qantas club. To maintain Silver status you need to accumulate 250 status credits but as you’ve had a taste of the Qantas Club, you now want to earn enough status credits to obtain a Gold membership which entitles you to access to the Global Lounges. So now you only fly Qantas so you can earn those coveted status credits regardless of how much more you are spending flying with Qantas rather than one of their competitors. Pretty smart!

So what will you be looking for when you join your next loyalty program?