Loyalty Programme Engagement in 2024

Boost loyalty programme engagement with personalised rewards, gamification, exclusive experiences based on user behavioural data. Learn how understanding customer preferences and delivering targeted incentives can drive long-term brand engagement and boost customer lifetime value.

So, you're planning or revamping a loyalty programme and looking for ideas on how to drive customer engagement for the initiative?

Many businesses are in the same boat. 

They all want the same thing: for the customer to ‘engage’ with the brand and become a loyal supporter for life. In an age of intense competition and countless choices, engaging customers is now the main pathway to success for many businesses. 

Understanding loyalty programme dynamics and developing engagement tactics that fit evolving consumer behaviours is a good place to start. Using simplified approaches to provide personalised, gamified and data-driven purchasing experiences, you too can unlock the full potential of your loyalty programme. 

Contents:

• Key Takeaways

• Why is Customer Engagement Important in a Loyalty Programme?

• What are the Benefits of Increasing Customer Engagement in a Loyalty Programme?

• How to Measure Customer Engagement in a Loyalty Programmes

• Common Challenges in Maintaining High Loyalty Programme Engagement 

• How to Increase Customer Engagement in a Loyalty Programme 

• Leveraging Customer Data to Personalise Loyalty Programme Engagement

• Examples of Customer Engagement in Loyalty Programmes 

   

Get your copy of our gamification guide to see how to increase loyalty programme engagement.

Key Takeaways

• Personalised loyalty programme rewards, gamification, and exclusive offers are crucial for increasing customer engagement and fostering long-term brand loyalty.
  
  

• Boosting brand loyalty requires creating a strong customer value proposition, delivering exceptional products and services, and providing a personalised customer experience.
  
  

• Gamification elements such as points, badges, and leaderboards can significantly enhance loyalty programme engagement and keep loyal customers interested.
  
  

• Regular communication with loyalty programme members through personalised emails, in-app messages, and social media is essential for driving programme engagement.
  
  

• Loyalty programme data analytics provide valuable insights into customer behaviour, preferences, and engagement levels, enabling data-driven decisions to improve the customer experience.
  
  

• Reducing customer churn involves identifying at-risk customers, engaging them with targeted offers, and continuously monitoring customer engagement metrics.
  
  

• Creating emotional connections with customers through personalised experiences, exclusive events, and surprises strengthens emotional bonds and drives long-term loyalty.
  
  

• Personalisation is key to improving the customer experience in loyalty programmes, as it allows businesses to deliver relevant, value-driven content and incentives.
  
  

• Offering a mix of transactional and experiential loyalty programme rewards caters to different customer motivations and drives lasting engagement and loyalty.
  
  

Why is Customer Engagement Important in a Loyalty Programme?

Engaged customers are always excited to redeem loyalty programme rewards. They are active participants who champion your brand. That's the power of customer engagement in a loyalty programme

It helps you nurture loyal customers who stick around longer. These customers are the backbone of any business… 

Especially since you can expect 80% of your overall revenue to come from loyal customers.

And keeping them happy is key to driving customer retention and increasing revenue.

Providing value beyond transactions

But it's not just about transactions alone. Prioritising customer engagement within the programme builds emotional links to your brand.

If customers feel that you care about them, they will care about you.

Instead of constantly mining for new customers, you can concentrate on those customers who know and advocate for you already. Reduced customer acquisition costs combined with a greater investment in loyalty translate to improved bottom lines.

But to what degree does your programme really connect with customers? It’s all in the metrics that you track.

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What are the Benefits of Increasing Customer Engagement in a Loyalty Programme?

If you spend time engaging your customers, the payoff can be huge. Here, let's analyse the benefits of customer engagement in your loyalty programme.

Improved customer retention and loyalty

A more engaged audience leads to greater customer retention rates and loyalty. Obviously, a loyal audience would be less inclined to abandon you in favour of your competitors and stay with you through thick and thin.

80% of customers  believe a brand's engaging experiences are as important as its products and services.

Higher customer lifetime value

What’s more, when customers engage, they spend more on new products or service packages they might not be inclined to try otherwise. They trust your brand and are always willing to invest in that relationship.

Existing customers spend 31% more and try new products 50% more than new customers.

Increased brand advocacy and referrals

But the benefits don’t stop there. Repeat customers are your best brand ambassadors. They’ll talk to friends and family about you and write great reviews. 

When satisfied, 72% of consumers will tell six or more people about their experience.

Who can put a price on that kind of free PR? Especially when their word of mouth marketing boosts your conversion rate.

More effective personalisation and targeted marketing efforts

Not overlooked, of course, is personalisation: the better you know your customer, the better you can personalise your content and offers to what you know they like and what motivates them to buy.

Among the factors that influence their purchase decisions, 73% of customers cite experience as important.

Everyone wins: your customers feel recognised, and you get better engagement and results.

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How to Measure Customer Engagement in a Loyalty Programme

Measuring engagement in loyalty programmes involves looking at how often and how actively customers use the programme, and whether this influences their purchasing behaviour and customer loyalty to the brand.

That way, you can track how healthy your programme is, over time, and what might need to be tweaked to make it better at engaging customers.

Use these metrics to measure customer engagement in your loyalty programme.

Programme enrolment and activation rates

First, keep an eye on your enrolment and activation rates. Are customers signing up for your programme in droves? Are they actually using their accounts? These are all indicators to help you assess how your programme is performing.

Redemption and earn rates

Look at your redemption and earn rates next.

Are customers redeeming rewards and converting on any conditional rewards? e.g receiving rewards in exchange for upgrading to a high programme tier.

High redemption rates might mean that your customers are actively engaging with your programme.

Segmentation and personalisation 

It’s easier to build engagement if you personalise – for example, if you put loyalty programme members in groups based on their behaviour, it’s easier to send them offers and bespoke communications that match their needs.

Assess how well your personalised content is resonating with different segments of your audience. Higher engagement rates with personalised offers show that your segmentation strategy is spot-on.

Social media interaction

Don't forget about social media. Monitor mentions, shares, and general activity related to your loyalty programme on social media platforms. Positive interactions and buzz can indicate a high level of engagement and help you identify your most passionate brand advocates.

Email and communication metrics

Finally, take a close look at your email and communication metrics. Measure open rates, click-through rates and engagement with promotional or sympathy emails sent to your loyalty programme members. If the rates are high, it means that your communication is relevant, valuable and meaningful to your recipients.

Customer engagement metrics 

But don't stop there. Dig deeper into metrics like loyalty programme dormancy and customer lifetime value. 

If you see lots of accounts that have been abandoned or short-lived memberships, maybe it’s time to shake things up by trying some new approaches.

And comparing the lifetime value of your programme members versus non-members can reveal just how effective your programme is at boosting customer loyalty and engagement. 

If non-members are more engaged or there’s no difference between both, then you might need to take another look at your reward strategy.

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Common Challenges in Maintaining High Loyalty Programme Engagement

While challenges may vary depending on programme type, reward structure or business model, let’s explore some common challenges that occur across the board.

Ineffective engagement and communication strategies 

Customer engagement and communication are key to any loyalty programme. Even your most loyal customers may leave if you do not keep in touch. Promotion and awareness via multiple channels are essential to a successful programme.

Lack of personalisation and relevance 

Lack of personalisation and relevance is a loyalty programme killer: modern customers expect brands to treat them as individuals. 

61% expect brands to personalise experiences according to their preferences

Customer engagement may decline if your programme doesn’t meet these standards.

Complex redemption processes and unclear benefits 

Overly complicated redemption processes are another issue. Customers might drop out if it is difficult to understand how the points can be earned and redeemed – or if the processes are too difficult. Or if the benefits of participating in your programme aren’t clear and compelling.

Inability to adapt to changing customer preferences 

Maintaining loyalty programme engagement requires adapting to changing customer preferences. Companies that do not adapt risk losing customers. Being agile and customer-focused helps you to maintain high engagement over time.

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How to Increase Customer Engagement in a Loyalty Programme

There are several creative ways that you can use to boost customer engagement. Here are some strategies that you should definitely give a try.

Implementing gamification and challenges

Fun and friendly competition are great ways to boost loyalty programme engagement. Gamification taps into our natural desire to play, achieve, and win. 

Interestingly, gamification is linked to a 7x increase in profitability for businesses. 

Gamification elements like points, badges, and leaderboards can encourage customers to use your programme more often and meaningfully. 

Create challenges that encourage customers to buy within a certain timeframe or try a new product. You can also create levels or tiers that customers can unlock by earning points, creating a sense of progression and accomplishment.

Offering personalised rewards and experiences

Personalisation drives loyalty programme engagement. Tailoring rewards and experiences to customers' preferences and behaviours can strengthen relationships and value. Segment your audience and offer targeted rewards using customer data.  

Personalisation boosts business profitability for 90% of top marketers.

Your most-valuable customers could receive exclusive experiences or products or personalised recommendations based on past purchases. Surprise and delight customers with birthday gifts or discounts on their favourite products.

Enhancing loyalty programme communication and touchpoints

Communication is key to keeping your loyalty programme top-of-mind and encouraging engagement. Use email, SMS, in-app messages, social media, and other channels to communicate. 

Keep everyone informed your programme launch, new rewards, promotions, and programme improvements. Give clear instructions on how to earn and redeem points and offer customer support. 

Consider a loyalty programme portal or microsite where members can check their account and redeem their rewards.

Creating tiered membership levels

One powerful strategy to boost customer engagement and loyalty in a loyalty programme is through the implementation of tiered membership levels. By creating different tiers with varying levels of rewards and perks, you can create a sense of exclusivity and aspiration among your customers.

At higher tiers, customers can unlock more valuable rewards and exclusive perks, incentivising them to engage more with your programme and ultimately increase their lifetime value. This tiered approach not only encourages customers to strive for advancement but also reinforces their loyalty to your brand.

By offering a clear pathway for customers to progress through the tiers and access increasingly attractive benefits, you can create a sense of achievement and reward that keeps them coming back for more. Tiered membership levels not only enhance the overall customer experience but also drive sustained engagement  in your loyalty programme.

Incorporating social sharing incentives

Using social media can boost engagement and advocacy. Customers spend 20–40% more with brands that respond to social media inquiries.

Keep in touch with customers on social channels and provide excellent customer service when they need it. Listen to their experiences and pay attention to their pain points. You can also offer rewards to loyalty programme members who share their experiences with their followers on social media channels like Instagram or Twitter. 

Offering bonus points or a small discount for social activity creates more visibility and engagement for your programme. Promoting user-generated content is also an effective way to engage and acquire new customers with compelling social proof.

Mobile first UX

Your loyalty programme must be optimised for mobile devices to engage modern customers.  

Millennials access loyalty programmes 14 times more on smartphones than computers. 

If customers can check in to your programme via their smartphone, you’ve made it easy for them to keep your brand top-of-mind, right at their fingertips.

Send push notifications when customers earn a new reward or take advantage of a new promotion, and give them easy access to purchase history, account information and available incentives. Use mobile-exclusive incentives and experiences to keep them engaged with your brand on their mobile devices.

Partnering with other brands to add value and engage customers

Brand to brand collaborations with complementary businesses helps create extra value for your customers.

These closely aligned rewards and incentives can be funded by your partners in exchange for advertising space (the partner offer) within your loyalty programme.

This works especially well in the affiliate marketing space.

For example we have an integration with Awin, the global affiliate marketing technology platform.

Our customers can access Awin's advertiser network and select offers from complimentary brands. These can be imported into their programme to give their audience additional value.

For more information about partnership marketing download our playbook.

Consider a premium loyalty programme

Paid for loyalty programmes offer your programme members a genuine sense of ongoing value and engagement as they will want to take advantage of all offers as part of their monthly fee.

Allow members to subscribe to a special tier or add-on that offers high-value perks and experiences. 

Subscribers could receive more valuable rewards and special access to more premium services. This approach gives them more opportunities to engage with your loyalty programme and also offers you a recurring revenue stream.

Leveraging Customer Data to Personalise Loyalty Programme Engagement

To truly personalise programme experiences with your customers, recognise and leverage data about buyer behaviours, preferences and motivations. Start by gathering and analysing data from several sources.

Collecting and analysing customer behaviour insights 

• Interaction data: How do customers engage with your brand on your website, mobile app, social media, and email?
  
  

• Profile data: What demographic and psychographic data do you have about your customers (age, gender, location, interests)?
  
  

• Feedback from surveys, customer reviews, and social media: What do customers think about your brand and loyalty programme?

By aggregating and analysing this data, you can learn more about customer preferences and habits. Use loyalty programme analytics to find patterns and create customer segments based on common features and behaviours.

Segmenting customers and tailoring rewards

When you know your customers well enough, you can then further segment them according to profile and behaviour and customise the rewards, communications and experiences they receive.

Market segmentation increases sales for 80% of companies.

For example, you might segment by by customer lifetime value (eg, VIP or highest spenders, high potential, at-risk). 

You can then create personalised reward tiers, set conditional reward triggers (upgrade a tier or extend a subscription and receive x reward), and communications for each tier. This is crucial since…

over 60% of consumers will become repeat customers if a brand provides a personalised experience.

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Examples of Customer Engagement in Loyalty Programmes

Here are some great case studies of brands that prioritise customer engagement strategies in their loyalty programmes.

Starbucks rewards: gamification and tiered rewards

Starbucks Rewards reminds us that gamification and tiered rewards can boost customer engagement and loyalty. Customers earn ‘stars’ with each purchase that can be redeemed for free drinks and food. 

The programme features different levels based on the number of stars earned, with each level offering more valuable rewards. Additionally, Starbucks uses time-limited challenges and bonus star campaigns to create a sense of urgency and excitement.

Sephora beauty insider: personalised experiences and exclusive access

Sephora’s beauty insiders are treated to personalisation, special offers and members-only incentives. Beauty-product enthusiasts accumulate points on Sephora purchases that can be redeemed for premium samples, makeovers and consultations with beauty experts.

Sephora also personalises email campaigns and in-app content with recommendations for products and beauty advice based on past purchases and preferences.

Marriott Bonvoy: omnichannel integration and emotional connections

The central feature of a customer-centric strategy is the ability to integrate across channels to fulfil customer needs with emotional connections. Marriott Bonvoy demonstrates this with its loyalty programme Marriott Bonvoy Benefits.

Guests can earn points and redeem them for rewards across all Marriott properties and channels: in-person, online and mobile.

These range from hotel stays to tickets to concerts and chef’s table dinners, as well as exclusive events for high-tier members that help Marriott engage loyal members and attract new customers.

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Boost Loyalty Programme Engagement Today

To make your loyalty programme more effective at engaging customers, consider investing effort in personalisation, gamification, omnichannel integration and emotional engagement.

And provide relevant incentives, build memorable experiences and communicate across all touchpoints to build ongoing engagement, drive advocacy and create true loyalty.

Get your copy of our gamification guide to see how to increase loyalty programme engagement.