Companies with strong loyalty marketing programs grow revenues two and a half times faster than their competitors. In this article, Helen Cahill, Chief Success Officer at Coniq looks at the importance of loyalty, how to tailor a loyalty program to best fit your specific targets, and which type of program is most suited for shopping centres.

While it may seem that the statistic above gives enough reason alone to implement a loyalty program into your shopping centre, this is a simple view of a more complex issue. The key word “strong” gives a clue as to this complexity – it is only “strong” loyalty marketing programs that generate revenue.

What makes a loyalty program “strong”?
Most importantly, it must attract your customers. Ensure the benefits are simple to understand so a customer knows immediately what they must do to be rewarded, and what the reward will be. The program must have a simple omni-channel sign up experience, online, on mobile and at the centre.
Further to this, the reward must be considered as valuable enough to the customer to justify the (minimal) effort of signing up, plus the consideration of giving you their personal details. Customers are becoming increasingly savvy about who they share their details with and what they expect to get from it. This is called the data value exchange. As an “exchange”, the more you ask from your customers, the more value you must return to them through the program!
Shopping centre loyalty programs are much stronger when the majority of the brands in a centre agree to participate, allowing customers a wide range of incentives across different stores. Having too many hurdles and exclusions is the surest path to your customers becoming disengaged.
To find out exactly what rewards are most appropriate for your customers, your loyalty program should allow you to collect data from numerous customer touch points. To start with, vital information is collected during the sign up process, e.g. contact details and demographic information. Further details should be collected each time a customer opens an email, collects points and redeems an offer. This allows loyalty marketers to build up a more comprehensive idea of their audience and use this information to send the most relevant communications, rewards and offers targeted to predefined segments.
The reward must also be compelling enough so that customers continue to use your loyalty program time after time. The goal of a loyalty program is to create long-lasting relationships so if customers give up using it after a short while as they do not deem it worth the effort, or they forget about the program entirely, your program is doomed to fail!
Finally, truly strong loyalty programs are those that over time can be automated for replication once they achieve successful results. This means that personalised emails can be sent with little effort on behalf of the marketing team, leaving them to spend their time on more value-adding activities such as sourcing new offers and creating engaging content for future activities.

Different Types of Loyalty Programs
There are many different types of loyalty programs and we run through the most popular types in the retail space:
Virtual currency program – Transactional loyalty programs allow members to earn a predefined credit when they make purchases in participating stores. These credits can then be used towards future purchases to reduce the transaction price e.g. for each £500 spent, £5 credit is allocated to your account which can be redeemed against a future purchase.
Points collection program – A very popular rewards mechanism is points based, where loyalty members earn points for taking certain actions, including making purchases or doing certain actions e.g. visiting a certain location and breaking a geofence. Members are given a “rewards catalogue” showing which incentives can be redeemed for each points amount earned, e.g. 50 points for a free coffee, 1000 points for a 10 per cent off voucher for a participating store. Customers can choose to redeem just a few of their points for a small reward, or save up their points for a larger reward that may take their balance down to zero. While this is a form of transactional loyalty, the personalisation of offers leads to emotional brand loyalty over time.
Stamp program – A stamp/token/star is awarded to customers who take certain actions e.g. making a purchase or visiting the information desk. Stamps are capped at a certain number and then the entirety of stamps collected is redeemed against a reward. No partial redemption is permitted, and rewards cannot be “stacked” to receive a greater reward. Typical examples of this include a free coffee after the purchase of ten hot drinks.
Tiered loyalty scheme – Once a member spends a certain amount, or makes enough visits to a mall, they rise to a higher tier which unlocks different rewards/experiences e.g. members who have spent a total of £1,000 through the loyalty scheme within one year are entitled to VIP rewards such as valet parking for a heavily discounted rate. Unlike points collection, redemption of an offer does not reduce their “lifetime points total” allowing them to continue rising through the tiers rather than falling back upon a redemption. While more complicated to implement, this can have great rewards in terms of emotional loyalty from your high-value customers.
Tourist program – These programs allow you to give special discounts or rewards for your tourist shoppers. Enabling you to understand where your tourist shoppers are coming from, how often, and where they are shopping. It is also possible to use the functionality of the sign-up forms to identify and partner with your most engaging tourism agencies, partners and hotels.
Paid program – An exclusive program that members are required to pay to join. In return, they receive discounts, offers and invitations to members-only events. As members have made an investment into your loyalty program, they are more inclined to use it. However, they often form only transactional loyalty rather than emotional loyalty, unless there are excellent personalised communications used in tandem. Paid programs are growing in popularity because these guarantee revenue to the loyalty program owners.
Surprise and delight program – An emotional program where shoppers are offered targeted rewards based on their behaviour and predicted value. A key element here is to surprise members, rather than allowing them to select offers from a catalogue of available rewards.
Gamification program – Gamification elements are used to unlock a specific reward, for example shop at the centre three times over the summer to win a gift voucher, or shop at four stores in one day. These are usually designed to trigger certain behaviours as part of a larger program (e.g. to drive repeat local visitors to a centre over the summer period). Often this is used in conjunction with another type of loyalty program, e,g, when your stamp card is redeemed you can enter a draw for a special prize.

Mixing and matching
Many of the above can be combined to make the perfect loyalty program for your shopping centre and customers. For example, a points program, with a tiered structure that unlocks targeted and experiential rewards will create both solid transactional loyalty, as well as more deep rooted emotional brand loyalty. Gamification could then be used to drive a repeat visit during quiet times, and then an Invitation Only tier could be launched in specific centres to give extra special treatment to certain VIPs. This means that the loyalty proposition can evolve from centre to centre over time with no additional cost or complexity.

Conclusion
In summary, a simple points based loyalty mechanism allows you to engage your target audience in a cost effective way that is flexible enough to cater for all of your business goals.
To help you get this right, here are our five tips for effective loyalty:

  1. Create a compelling proposition that customers will keep coming back for again and again
  2. Ensure you are capturing enough, good-quality data to build long lasting relationships with your members
  3. Tailor your offers and rewards to your particular customers and centre goals
  4. Delight your customers at every step of the journey – use geofencing to entice them to enter your store and reward them for doing so
  5. Remain flexible in your offers, campaigns and messaging. Constantly review the effectiveness of your program and make any changes necessary to cater for any changes in customer sentiment