So you’ve put a loyalty program in place to reward your best customers and drive sales. Before implementing the program you did all your homework: researching what your customers want, structuring loyalty tiers to reflect natural profitability groups, setting up cost effective communication methods and you’re running regular promotions to drive sales. Despite all this, your business isn’t looking any healthier – sales haven’t increased and neither has the number of loyal customers on your database… Why you ask? The answer is in the data.

Too often organisations put a loyalty program in place and then sit back and expect it to work on its own without tailoring promotions to suit specific customer groups. A one size fits all promotion (double points today, triple points tomorrow) is the lazy man’s answer to loyalty marketing and it’s responsible for pulling this marketing tool’s name through the mud. When loyalty programs are set up and left to die they become nothing more than an extra cost of doing business.

The real value of a loyalty program is in the rich customer data you gain in setting them up. Tracking and analysing what your customers spend at a transactional level can transform not only your marketing, but many aspects of your business model.

Without a doubt, the exemplar in this field is Tesco in the United Kingdom. Tesco uses their loyalty data to drive the business by analysing the information provided by their customers to not only make targeted and highly relevant offers to quite small segmented customer groups, but to also develop the brand’s in-store design, product ranging and new products and services. Tesco’s use of the data is a significant driver in what has made that brand the success it is today.

Whether you have a marketing budget comparable to Tesco or not, there’s four simple steps you can take to ensure your brand’s rewards program doesn’t end up in loyalty heaven:

• Ensure you are able to access data at a transactional level. If you can’t, you’re missing out on a huge piece of potential value. If you’re not capturing it now, work out how you can. Right now. 

• Run some basic segmentation and analysis. If you don’t have the ability to do this in-house find someone externally who does. Use the segmentation to focus on recency, frequency and monetary (RFM) and natural customer segments.
• Start small and start by testing. Set up control groups based on ‘like customers’ and make different offers to see how they respond. This will help you to understand what drives sales very quickly.

• Structure activities to fit in with your overall promotional plan and in line with any tiers that are part of the program structure. Ensure you schedule loyalty campaigns when you need sales and leverage other advertising or in-store activities. Loyalty campaigns are only part of how customers interact with you and therefore it needs to be seamless or it will look out of place and irrelevant.

And finally remember that true loyalty means rewarding customers across all parts of your business. A loyalty program is a great platform, but if your best customers aren’t experiencing great service when they’re in your store or on the phone then they will go elsewhere no matter how targeted and generous the sales offers and rewards are.