FAQs

Loyalty Agencies

A loyalty agency, like any other agency, is a business whose mission is to assist companies with loyalty. Loyalty is a fast growing industry and there are different types of agencies, from small providers focussed on one aspect of loyalty right up to larger agencies who can offer everything from consultancy to enterprise platforms to analysis. Loyalty agencies will typically have a team of account managers, project managers, developers (although this could be outsourced), business analysts, graphic designers and customer service staff. Choosing the right agency to work with depends on your requirements and we would always recommend speaking to a few different agencies to make sure you are working with the right one.

A loyalty program is designed to change customer behaviours. A well-designed programme should drive customer growth, motivate customer retention and inspire customer acquisition. Personalising the programme to the audience will build their emotional connection with the business. Traditionally, loyalty programmes include a mixture of hard benefits (rewards and discounts) and soft benefits (service benefits, VIP rewards) that reward the customer for their purchases. The program will usually be closely integrated with the brand identity and culture as well so that the program is consistent with the wider customer experience.

Customer loyalty is the result of multiple positive experiences with the brand that build up trust over time. It’s about building a relationship with the customer so that they are connected, valued and understood by the business.

Loyalty continues to bring positive outcomes for brands and the impact on advocacy, retention, and spend remains strong. The 2020 study by Bond found that 72% of customers are more likely to recommend a brand with a good loyalty programme, 78% of customers are more likely to keep doing business with a brand with a good loyalty programme and 64% of customers modify their spend to maximise point earnings.

The vast majority of British people are members of loyalty programmes and are fans of them too:

  • 75% are current members of programmes
  • 73% think loyalty programmes are a great way for brands and businesses to reward customers
  • 52% think all brands should offer a loyalty programme

We believe there are 9 types of loyalty programme models:

  • Simple points system
  • Tiered loyalty programme
  • Milestones
  • Charge an upfront fee
  • Partnership based
  • Community engagement
  • Subscription
  • Gamification
  • No programme at all

There are many different types of loyalty programmes and although there are a few that are strictly one type only, the most notable programmes often utilise a number of the above types in order to reach the maximum audience and drive the most engagement.

You don't need to use a loyalty agency to run a loyalty programme, however an agency should be able to bring experience of different markets, campaigns and audiences that will help you shape the right solution for your business. An agency should also have to hand all of the skills required to implement a well designed programme from graphic designers to developers to business analysts to customer service staff. Having said this you could easily work with an agency on only part of your programme. Any agency worth working with should be able to prove its ROI.

The Importance of Loyalty

Loyalty programmes tie into a customers emotional reasoning. By creating a programme that makes a customer feel valued, that they get something for “free” or even tailored to them makes them make more emotional purchases rather than using logic e.g. searching around for the cheapest item available. Loyalty programmes are usually low cost but high yield. Acquiring a new customer can be up to 25% more expensive that retaining an existing customer. Having a stable loyal customer base is more profitable long term.

Any good loyalty programme should be a win for the customer as well as the business. A customer might switch their behaviours for a short time to get a specific reward but if the programme doesn't fulfill their needs long term, then the behaviour change won't stick. Ultimately your businesses service or product has to match the customers needs and then the experience they have with the brand has to match their values. If you can create an experience that the customer is happy to refer and talk about you have created something they feel part of. They have an emotional connection, and it is that emotional connection that a loyalty programme is designed to create.

We are firm believers that loyalty starts within, and you cant preach loyalty to your customers, if you aren't practicing it with your staff. To that end we would always recommend using your loyalty platform to run a programme designed for your staff. Using a similar programme on the same platform means your staff will be better able to communicate to your customers and are more likely to live and breathe your brand.

Loyalty Programmes

We believe there are 9 types of loyalty programme models:

  • Simple points system
  • Tiered loyalty programme
  • Milestones
  • Charge an upfront fee
  • Partnership based
  • Community engagement
  • Subscription
  • Gamification
  • No programme at all

There are many different types of loyalty programmes and although there are a few that are strictly one type only, the most notable programmes often utilise a number of the above types in order to reach the maximum audience and drive the most engagement.

Loyalty programmes are run by businesses in order to incentivise customers to do repeat business with their brand as well as motivating customers to switch from their competitors to them. Brands do this by offering rewards, discounts and personalised marketing through their loyalty programmes. A brand offering a loyalty programme that distinguishes them from their competitors can make them a more attractive company for customers to do business with. If a customer feels that they get something extra with every transaction, they are more likely to keep repeating the action in order to get a reward/ benefit. Remember, the purpose of these programmes is to drive revenue, engagement, loyalty and brand awareness. In layman's terms: a brand wants a customer to buy solely with them so they will reward the customer for continuing to do business with the brand and they will also reward the customer for switching from the brands competitor to them. Simple really. Loyalty programmes can span for years or be short in duration. An example of a successful short campaign would be McDonald’s monopoly game. When they published their sales uplift for the promotion period in 2019, they saw their sales increased by 3.3%. A key point to note as well is that loyalty programmes should provide a clear return on investment. Although there will be a large up front cost to develop the programme, you will see the benefit with the sales uplift.

Points based programmes are still the most well know model as they are so deeply ingrained in our idea of loyalty programmes. Points are also soft benefits – a point can be worth a determined amount of actual monetary currency so from a business cash flow perspective, there is minimal financial risk. Base rate points programmes enable a brand to run promotions to encourage sales, engagement, data collection and so forth. E.g. if you wanted to ensure that your longest serving customers details were correct, you could run a promotion that meant you rewarded points for everyone that checks their profile and updates their contact preferences. This would enable you to market to those customers more effectively, therefore tailoring the programme and increasing sales. The Starbucks loyalty programme is one of the most successful programme to date, as it has almost 20 million users. In fact, because of the amount of “cash” that sits on their customers accounts, 1.5 billion dollars, they have more available money than some banks. They also anticipate that 10% of that money will be forgotten about by customers that may no longer wish to use their account.

Loyalty Marketing Strategies

Before implementing a loyalty programme you need to ensure you have defined the programme, its objectives and what the ROI is. We prefer to think of any programme as a strategy first. The strategy should be at the heart of the business and be able to be understood and communicated by everyone in the business. It isn't just a bunch of rewards that customers can earn, it goes much deeper than that. Work out what behaviours you want from your customers, what you are willing to reward them with and then work out how you are going to achieve it.

One great example of loyalty marketing is O2’s Priority programme. O2’s programme is largely focussed on offers and experiences, included discounted restaurant and entertainment offerings, access to tickets before they have even been released and priority entry to O2 venues.

The programme has over 2.5 million users and is the only UK loyalty programme app with a 5* rating in the Apple App Store.

Loyalty marketing is important as it allows you to gather data on your customers which you can use to analyse and deliver a more personalised experience. You can also use loyalty marketing to retain your customers, it is a well-known fact that it is 5 times cheaper to retain a customer than to acquire a new one. Loyalty marketing is also important as it gives you an edge in your competitors. Additionally, loyalty marketing also builds brand credibility.

Consumer loyalty is the act of consumers who continue to buy the same brands of goods rather than competing brands due to their relationship with the brand. This can be achieved through developing a deep understanding of your customers buying behaviours and their interests. Once you understand what makes your customers tick you will be able to develop a loyalty strategy fit your business.

Customer Loyalty strategies can come in various shapes and forms, three key strategies that Stream Loyalty Use are the Keep, Grow and Win campaigns.

Keep campaigns target your ‘best’ customers ensure that your key customers are being looked after and that they are referring and recommending you wherever possible.

Grow campaigns target those accounts or clients that you want to grow by encouraging them to increase their spend.

Win campaigns encourage new customers to register with you gamifying the process so that customers earn more rewards the more they do with you.

Why is Loyalty Important in B2B?

Absolutely, loyalty programmes can have a huge impact in B2B. remember that your B2B customer is a consumer when they leave the office so they are already used to transacting with companies that offer them loyalty. The complexities are greater in the audience relationship and personalisation requirements but the rewards can be huge. In a recent programme, we delivered a 23% increase in revenues, 80% increase in referrals and 43% increase in brand stretch. Imagine what that could do to your business trajectory.

The 4 types of programme models are:

  • Points based model
  • Subscription model
  • Paid for model
  • Advocacy model

Within these 4 models though you can create multiple combinations of programmes. Each model can be layered into one programme. Different models can be provided to different members and/or campaigns. Dont let your software or technology limit you to only one programme model. Start by thinking about your audience and what they might want and then devise a programme to suit their needs.

Creating a loyalty programme in a B2B business is more complex than in B2C as the relationship you have with your customer is often much more personal. The audience needs to be considered from more angles as the relationship is likely to be one to many rather than one to one which is what we see more regularly in B2C. In a B2B loyalty programme you need to be even more focussed and personalised on the needs of each member. If you only have one person from each business as a loyalty programme member, should that be the person who pays the invoices, the person who decided which suppliers they use or the person who completes the transactions. The rewards each person will be motivated by will be different as well so you need to really understand the audience and personalise every aspect of the programme to engage them. The mechanics by which you reward each member can be the same but each might have different outcomes.