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Loyalty Program Strategy and Alignment: The First Steps to a Successful Launch

Loyalty program strategy and alignment is the first step in designing a successful program.

You have to get your key stakeholders and your loyalty partner on the same page from the beginning.

The best way to accomplish this is through a virtual workshop to identify the strategy and ensure alignment.

Here is what a typical strategic alignment workshop looks like step by step.


1. Stakeholder Alignment

Ensuring stakeholder alignment is the first and most important step toward success.

Your organization needs to be in lockstep so that the development, ongoing management, and outcomes are seen through the same lens.

This is a critical step as there are many company stakeholders which could include Finance, Technology, Store Ops, CRM, and Merchandising.

Whenever we start working with a retailer to build a loyalty program, we meet with the key stakeholders to identify promotion, currency, and/or solutions options that may be deployed through the program.

With this meeting, ideally, we want representation from each of these stakeholder groups. They often have different goals, so we try to get it all out on the table during this meeting to make sure everyone is aligned.

Brainstorming with all key stakeholders is crucial to understanding what important benefits and experiences might be for the program.

We want to uncover existing assets that can be leveraged.

Any potential opportunities, as well as constraints, are uncovered in this meeting. It gives our team a solid understanding of what we need to build to ensure a successful program.

We also find that having an executive sponsor is a key requirement to help drive the organization. The executive sponsor is usually someone from the Marketing/CRM team, but could also be from various disciplines.

At the end of the day, the more stakeholders represented who are clear about their goals, the easier it is to design a successful program.


2. Loyalty Baseline

With a loyalty baseline, we outline what you’re doing today or what you have done in the past.

  • Any past metrics that indicate positive consumer behavior?
  • What are your competitors doing?
  • What other loyalty tactics have you seen that might be of interest, even if they’re not from a competitor (experiences, special status, etc.)?

For example, Sephora’s tiered loyalty program lends itself to consumer obsession with exclusivity.

Sephora has done an excellent job listening to what its customers want and aligning its loyalty program accordingly.

For example, members gain access to experiences like makeovers, a private hotline, and invites to exclusive events depending on where they fall on the purchase spectrum.

One of the most interesting benefits is Sephora’s members-only Beauty Insider Community, which is a social platform that allows its members to create a profile, upload photos, and chat about products and fashion.

Reaching these upper tiers makes customers feel like they’ve achieved elite status and encourages others to strive to reach it.

Your loyalty baseline doesn’t have to focus on just loyalty programs, but any loyalty initiatives companies have in place.

While all these points make sense for Sephora’s customers, your customers are different.

This exercise helps uncover what you’ve done that works for your customers, what hasn’t worked, and other areas you can draw inspiration from.


3. Define Critical Elements

Aligning on the metrics upfront will ensure the right design and consumer experience. Each stakeholder may have different goals and that’s fine, but you need to understand that up front. For example:

  • What are the goals and objectives of the program?
  • What are the KPIs you want to measure?
  • What does a successful loyalty program look like to you?

Here’s a video around aligning on loyalty program goals.

Market research and feedback from your customers is paramount. Understanding what is important for your customers is probably the most critical aspect before designing the program. We can brainstorm the best ideas, but if they don’t resonate with your customers, the program isn’t going to be a success.

It’s also important to reflect.

What have you tried before? What have your competitors done?

The program will only succeed if your customers buy into it and trust the value proposition you’re trying to drive.

Here are the 7 premium loyalty KPIs you need to be measuring.


4. Potential Limitations

Many companies want to include customer loyalty as a key strategy, but many don’t have the resources in-house to accomplish their goals.

That is where loyalty vendors enter the picture and can become true partners with brands.

Technology: Often companies are limited by what their current technology system will allow. Understanding what is possible is important.

From our perspective, we can usually find a way to work around this to build a solution that will work for our partners, but we must all be on the same page going in.

Looking for the Right Loyalty Management Software? Here are 8 Questions to Ask

Budget: What if any exists for the development and ongoing management and rewards?

Building and managing a loyalty program in-house is a massive undertaking and requires extensive resources, including people and technology.

Many loyalty vendors offer a range of services like managing strategy, building a platform, implementation, marketing, analytics, and optimization. But these services carry a hefty price tag.

Platform implementation can cost six figures while managed services could be similar or higher.

At Clarus, we have a much different loyalty program pricing model that doesn’t charge up front for the build or for ongoing management.


5. Program Concept and Ideation

Once the previous items are outlined, the team can start developing concepts and brainstorming member benefits, rewards, and consumer experiences.

This is the stage where we start to formulate the direction of the program and the value prop of the program. And in our opinion, it’s the most exciting part of the alignment workshop. The ideas come to life while still being grounded in data and what is possible.

This is still very early in the process, but this should be open and fun.

No idea is a bad idea at this stage, but it’s important to capture all the ideas to ensure you have enough value as you start to outline the value proposition.

From a transactional sense, what is important to your customers?

Instant benefits like instant discounts and free shipping are great at getting customers into your program because they make it easy to understand the value proposition. But what about experiential benefits?

These benefits are what allow brands to differentiate themselves. Things like members-only access, VIP treatment, and other exclusive experiences are what build deeper connections with your customers.

Two loyalty offerings, Amazon Prime and Restoration Hardware’s RH Members program, each combine transactional and experiential benefits.

Prime launched with free shipping, but now offers benefits such as Prime Music, Prime Photos, Prime Day, Prime Photos Family Vault, Amazon Music Unlimited, and Prime Exclusive Phones.

Restoration Hardware gives program members 25% off every purchase, and then adds experiential benefits such as complimentary interior design and concierge services.

It’s important to identify what your unique customers would value and try to balance transactional and experiential benefits.


Make Sure Everything and Everyone is Aligned

So, no matter which loyalty partner you’re working with, make sure you’re thinking of the following when it comes to your loyalty program strategy and alignment session:

  1. Stakeholder alignment
  2. Loyalty baseline
  3. Defining critical elements
  4. Potential limitations
  5. Program concept and ideation

Not only does every retailer have different needs on a company level, but your customers also have different needs as well.

A loyalty program should work for everyone – you and your customers.

Once you’ve aligned on the areas above, it’s time to work on your loyalty program design and validation.

Looking for a loyalty management company? Check out The Ultimate Guide to Loyalty Management.

Michael Iannucci

Michael Iannucci is our Executive Vice President, Business Development & Client Management. He has over 15 years of experience at top loyalty marketing and subscription commerce companies, where he held leadership positions in sales, business development, and account management.

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ebbo™ is an all-in-one loyalty company. With our data driven strategy, full-service approach, and the unwavering support of the people behind the platform, our dedicated team will work with you to understand your loyalty goals, innovate solutions and help you build customer engagement on repeat.

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