This document discusses how loyalty programs are evolving beyond just transactional rewards to focus more on customer engagement and emotional loyalty. It notes that while financial rewards are still important, programs need to provide achievements and recognition to build deeper loyalty. Successful programs recognize both transactions and interactions, offer a variety of reward types, and keep the customer experience fresh and surprising. The best programs also facilitate social connectivity and tailor the experience to each individual customer. Overall, the key is moving beyond just rewarding transactions to fostering real engagement and emotional loyalty through a well-designed, integrated customer experience.

1. Loyalty Programs: Going Beyond Transactional Rewards
Lisa Evans
Vice President, Analytic Strategy
KBM Group

2. of CEOs are looking for new ways
to stimulate customer demand
and loyalty this year.
(PWC, Global CEO Survey 2013)
82%

3. “The actual shopping, interactions and flow…and rewards…all are
supported with orchestrated media, providing the stories that people can
gather around.” (Forbes, 1/3/13)

4. 27%
Enrollment
4%
Participation
(COLLOQUY Loyalty
Census 2013)

5. Financial Rewards Emotional Loyalty
Monetary rewards are
expected but are not
enough to build
deeper brand loyalty.

6. • Maslow was right
—people need
achievements and
respect.
• Behavior-based
recognition is
rising fast.

7. Constant Evolution is Required
Engagement has to
constantly evolve
to stay interesting
• Changing reward
types
• Surprising with
unexpected
rewards

8. New Level of Customer Expectations
Expectations of experiences are determined by what have now
become ubiquitous brands.
Customers are increasingly expecting the same type of
experience regardless of their role as an individual (B2C) or
organizational buyer (B2B).

9. Business to People (B2P)

10. Behavior Drives Loyalty
Program
Recognizes
Program
Rewards
Members
Transact
Members
Interact
Traditional Programs

11. Transact & Interact
Members
Transact
Members
Interact
• Purchase/spend
• Save
• Recycle
• Social referrals
• Retail shop interactions–show
up
• Play games
• Watch videos
• Take a quiz/poll
• Social entertainment check ins
&

12. Reward & Recognize
Program
Recognizes
Program
Rewards
&• Travel
• Experiential
• Merchandise
• Gift Cards
• Charitable Donations
• Discounts
• Cash
• Product Influence
• Special Content Access
• Social Currency
• Status Rankings
• Virtual Badges
• Targeted
Communications
• Thank You

13. Social Connectivity Increases Perceived Value
Source:Badgeville

14. Set a High Bar

15. Insight
Loyalty
Experienc
e
Online
Experienc
e
Design Within the Customer
Experience Ecosystem
Insight–
• The core of the experience
• Drives the insights for each
individual customer
Online Experience –
• Tailored to user
• Provides the single online
experience for all marketing
programs and activities
Loyalty Experience –
• Beyond awarding points
• Experience associated with
being a loyal customer
Defined by marketing strategy and outlines
the foundation for solution-geared
experiences
Experience Ecosystem
Experience Components

16. Loyal
ty
Recognize
“Best”
Customer
Dialogue
is Critical
Give the
Customer
Control
Go
Beyond
Financial
Rewards
Know
Your
Customer
s
Reward
Engagem
ent not
just
Transacti
ons
Emotion
Moves
People to
Action
Loyalty Program Best Practices

17. Tier 1
VIP
Tier 2
Growth Customer
Tier 3
Low Potential Growth Customer
Loyalty Path
Content
Rewards
Connectivity
Communications
Increasing Program Value
Low
Engagement
Level
High

18. Key Program Pillars
1. Content Provisioning
(owned, access, earned)
1. Content Provisioning
(owned, access, earned) 2. Personal/Peer Connectivity2. Personal/Peer Connectivity
3. Surprising Content/Rewards3. Surprising Content/Rewards 4. More Loyal, More Willing to Pay4. More Loyal, More Willing to Pay
Solutions for emerging topics; surprise and
delight “rewards”
Facilitate personal/peer connectivity;
integrate social sign-on
Traditional
Loyalty
Traditional:
Give More
Away to Best
Customers
Price of
Perceived
Value
Modern Loyalty
Loyalty
Program

19. Be Curious

20. Transaction
Social
Lifestyle
Digital
Seek and Apply Insight

21. Social Listening Inspires
Program Innovation

22. Reward Portfolio Optimization

23. Media Targeting

24. Program Objectives
Member / Non Member Insights
Program Structure
Quantitative Insights
• Hard Benefits / Currency
• Social Audit
• Engagement (social, mobile, email)
Program Design / ROI
Implementation Planning
q
Test Design
q
Communications Plan
Measurement
Concept Design
Qualitative Insights
• Soft Benefits / Currency
• Enrollment / Redemption Process
Program Design Process

25. How Does Your Program Stack Up?
Your Market
Your Business
Your Customers

26. Q & A
Lisa Evans
Vice President, Analytic Strategy
Lisa.Evans@kbmg.com