How loyalty programmes help long term growth and boost profitability

How loyalty programmes help long term growth and boost profitability for brands

With recession fears growing again, we are certainly seeing unpredictability in consumer demand and changes to purchasing behaviours. But several strategies can help companies grow through challenging times. For most B2C or B2B brands, a loyalty programme – one that genuinely provides a value exchange to customers – can be one of them.

Data is key to detecting changes to demand and evolving market behavior. Combining macro data – which helps identify industry-wide patterns – to loyalty data, loyalty programmes are uniquely positioned to help derive better, actionable insights that improves customer understanding,  strategy building and marketing efficiency.

Loyalty programmes allow brands to detect detailed changes in consumer behavior by segment or at an aggregated level, while generating more revenue. These insights can help brands grow, retail more effectively and can even shape new behaviours when developing new customer propositions.

So, let’s have a look at how loyalty programmes can help brands create competitive advantages and lasting relationships with customers.

Know your customers by updating archetypes & segmentations every year

Reviewing your segmentation will mean you can either validate whether it is still relevant as it is or refresh it to be in sync with the market.

Working closely with our customers over the years, we have seen a wide range of segmentation techniques and criteria used by brands. At the core, we need to ask ourselves how relevant will traditional and static loyalty segments be in the immediate future?

Reassessing available data is the way to go. Some segments and their associated targeting strategies may no longer work if market trends have changed or brands have just grown old, out of fashion and become culturally irrelevant.


Think of what happened to Tupperware, which failed to grasp massive changes in market expectations and went from a brand that was seen as a brand that drove societal change and  was culturally meaningful to a brand lost its way.

Being a market or customer oriented brand will enable early identification and understanding of new consumer behavior, expectations, and priorities are needed to define and build new data-driven segmentation. These new segments will also likely evolve in line with market changes.

Using all available data to build new and dynamic segments will help maximize marketing accuracy and identify members with the highest potential to fill purchase again.

That is where the loyalty programmes add an extra layer of value to general data & research. Understanding what drives the most loyal customers to spend and come back is a great way to understand how to better position the programme and the brand to new customers.

Aside from demographics (name, age, gender), loyalty programmes have a wealth of data that can be used to segment members, such as:

  • Firmographics: organization name, work address, and industry;
  • Behaviours: purchase and engagement activity, look-to-book ratio, and conversion score;
  • Feedback scores from surveys;
  • Partner data: bank partners, and other partners from the loyalty ecosystem;
  • Competitive data: membership in other loyalty programmes and share of wallet;
  • Loyalty data: points balance, length of membership, CRM lifecycle, purchase history, customer lifetime value and tier history;
  • Psychographics: values, preferences, lifestyle, interests, and hobbies.

So, what are the main criteria to define a segment?

First and foremost, the data must be meaningful and actionable.

Aspects to be considered include consumer shopping behavior, identifying ne trends and best practices from loyalty programmes in other sectors, along with KPIs that define truly loyal members of a brand’s loyalty programme.

An up to date segmentation enables brands to focus on growing members with potential and rewarding truly loyal members, while deprioritizing unprofitable customers who divert attention and resources.

Improving the value exchange through personalisation

Brands are often tempted to resort to discounts to attract or get customers back. They receive more promotions and offers than ever before. Most are not personalised, which will contribute to a poor customer experience and negative brand perception.

Today, members increasingly expect an easy-to-understand programme that:

  • Rewards their efforts;
  • Fits their needs and values;
  • Carefully uses their personal data for their benefit.

How can brands differentiate their loyalty programme from that of its competitors and make that difference stand out to its loyal members?

By exploiting the data & turning it into insights that enable brands to identify the challenges or the barriers preventing customer from coming back. Then building a proper strategy that aims to provide a relevant answer to the identified challenges.

Then, the huge amounts of data that loyalty programmes collect can be used to better communicate with the brands’ segmented audiences through:

  • Effective targeting and engaging with members in a way that surprises and delights;
  • Creative, segmented and differentiated offers that integrate and promote partner offers & benefits to members;
  • Showcase how programme members receive unique, personalized offers versus one size fits all.

A powerful loyalty programme provides members differentiated, personalized, and added-value benefits, not just points, discounts or newsletters, which lead to higher conversion and revenues. Bain & Company estimates that loyal customers spend up to 67% more, refer more people, and are more willing to purchase more products from a company. The consultancy also estimates that a 5% increase in retention can lead to a 95% increase in profit.

Properly Rewarding loyalty

Going beyond simple transactional mechanisms is key for loyalty programmes to drive higher engagement. Brands can do this by:

  • Developping new propositions and services to increase programme value and attractiveness;
  • Providing new targeted & contextualized rewards or offers that use customer data to resonate with members;
  • Helping members get value in their everyday lives, by enabling them to save time, money, making it easier for them to find out about how to best enjoy the benefits.

Make it obvious for them that your brand and loyalty programme is right for them so they do not even consider switching to a competitor or start shopping around.

Loyalty programmes are profit centres

Many brands have built up their loyalty programmes into sizeable assets, changing the perception that they were cost centers. So now is the moment for loyalty programmes to further improve how brands use available data to personalize customer engagements and develop greater customer affinity. Loyal members are key to driving continuous growth and being perceived as a rewarding loyalty programme will help improve brand perception and the overall brand experience.

Get in touch with us at Groove Brand Experience to see how we can help take your loyalty strategy to the next level and deliver sustainable, profitable growth for your brand.