Loyalty Programs Play Critical Role in Success

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When companies think about how to spend their marketing budgets, loyalty programs should be considered an important aspect of their strategy. By creating a truly engaging system where the perks of membership are clear and relevant, any company can create a more passionate customer base and improve its bottom line in the process.

Starbucks is a powerful example of successful loyalty programs. According to USA Today, Starbucks Rewards,” …continues to grow… It’s up to 15.3 million active members, a year-over-year jump of 15 percent.”

Why loyalty works

What is it about loyalty programs that is actually helping the company maintain its position as an industry leader? According to Business Insider, Joe LaCugna, director of analytics and business intelligence at Starbucks, a big part of the equation is taking a highly personalized approach.

Loyalty cards are beneficial to companies in a multi-faceted way: The more customers use these tools, the more insight the company gains into their habits and what they might want. From there, companies such as Starbucks use the information to “[set] up rules based on [members’] purchase behavior,” which allows them to determine which loyalty rewards to send certain customers.

The way Starbucks segments customers based on data related to their past purchases can benefit any company, especially because it can save companies money. When companies know which loyalty program members are more likely to consider leaving for a competitor, they can strategically send out discounts at the right time. Furthermore, this also means they won’t use up their budgets sending these rewards to customers who are less likely to redeem them. The most loyal customers might be better served by other types of exclusive discounts, including gestures of appreciation that surprise and delight.

Additionally, having an excellent loyalty program improves customer experience, which can widen profit margins by making consumers more receptive to opening up their wallets. SalesForce pointed out that in its studies, only 10 percent of customers who are satisfied with their interactions with a company are concerned about price, compared to 74 percent of those whose expectations haven’t been met. The source stated that Starbucks is an excellent example of this concept in action. Consumers are consistently willing to pay more for their drinks because the company provides them with higher-level care.

Implementing the right private-label loyalty program that supplies customers with highly personalized, valuable rewards is a recipe for success. Happy members fuel great results, and it’s never too late to start the journey toward a more successful, customer-driven company.