My model for building thriving loyalty programs has three dependent ingredients that need to operate in harmony.
1. Meaningful and desirable for the members
2. Profitable and sustainable for the business
3. Believed in by the team
- The program is meaningful and desirable for the members: The program's proposition(structure, benefits and experience) need to motivate behaviours that make the effort for the reward worthwhile. They need to add to the member's life financially, emotionally and with simplicity. (My mantra here is SPV=Simple,Personal,Valuable).
- The program is profitable and sustainable for the business: The program’s measures of success need to deliver long term value for the business through income, insight and advocacy. Return on Loyalty Investment is a fundamental financial measure.
- The program is believed in by the team (there is buy-in): From board room to customer facing, the team need to believe in the program and buy in to the value it provides to the business and to members.
There is depth of detail beneath each of these and how to optimise each, however when one of these is not in harmony, the health of the program fractures.
A simple maths equation proves the point:
1 + 2 - 3 = members love it, it delivers on the measures of success, however with no team commitment and belief it will slowly die.
2 + 3 - 1 = it delivers on measures of success, the team believe in it, however if the program proposition is neither meaningful or desirable (adds little or no benefit to the life of a member) or benefits are squeezed out over time, member interaction will decline which then impacts 2 and 3
1 + 3 - 2 = program proposition and benefits are achievable and desirable, the team believe in it, however it is not delivering to business metrics, it will find its way to 'cost' rather than 'profit' which leads to a review or sometimes an exit strategy!
The simplicity of this three way dependency model, is it holds to account the impact that each has on the other.
It keeps top of mind the three critical ingredients and delicate balance needed to keep them in harmony for loyalty programs to thrive.
Are your three critical ingredients operating in harmony?
Have a happy loyalty day!