WHITE PAPER Building the Three Pillars of a Best …...WHITE PAPER | Building the Three Pillars of a Best-in-Class Loyalty Program 3 To succeed, a rewards program must create value

Building the Three Pillars of a Best-in-Class Loyalty Program

WHITE PAPER

2/3OF U.S. CONSUMERS BELONG TO A LOYALTY PROGRAM

8THE NUMBER OF LOYALTY PROGRAMS THE AVERAGE CONSUMER BELONGS TO

Nielsen Global Survey of Loyalty Sentiment

LOYALTY PROGRAMS IN NORTH AMERICA

WHITE PAPER | Building the Three Pillars of a Best-in-Class Loyalty Program

© Deluxe Enterprise Operations, LLC. All rights reserved. 2

Does it seem that loyalty programs litter the ground like gravel these days?

Does it seem every company has one, no matter how questionable its value

might be to the organization? Does your company have a rewards program

in place but haven’t seen the payoff you expected, let alone enough benefit

to justify continuing it? Perhaps your company has not yet taken the leap

into the world of rewards.

This white paper will explore the factors involved in creating and/or refining

a loyalty program, and explain the three fundamental pillars of all best-in-

class rewards programs: content, competition and communication.

Creating Mutual Value in a Loyalty ProgramLoyalty programs do abound in North America, and consumers indicate

they’re receptive to participation. Consider these statistics, culled from

multiple studies to the left.

Yet for all that expressed and implied interest in rewards programs,

less than 10% of all loyalty program memberships are actually active,

COLLOQUY reports. Why the disconnect? And how can your organization

ensure the high levels of participation that equate to optimum benefit for

both the company and its customers?

The North American Technographics Customer Life Cycle Survey from Forrester Research

Forrester Research’s Loyalty Program Participant Profile

78%OF U.S. CONSUMERS SAY LOYALTY PROGRAMS SAVE THEM MONEY

64%SAY THEY INFLUENCE WHERE THEY MAKE PURCHASES

76%OF NORTH AMERICANS POLLED BY NIELSEN SAID THEY WERE MORE LIKELY TO CHOOSE TO DO BUSINESS WITH RETAILERS THAT OFFERED LOYALTY PROGRAMS

© Deluxe Enterprise Operations, LLC. All rights reserved.


3

To succeed, a rewards program must create value – for both the consumers

and the company offering the program. To effectively generate loyalty, a

program must be demonstrably applicable to the needs and motivations of

the targeted consumers. It must offer customers rewards relevant to their

lifestyles, rather than simply offering promotional materials in the guise of

“rewards,” or – even worse – merchandise, discounts, and incentives that the

consumer doesn’t want or need.

Creation of a relevant rewards program requires you to understand who

among your customers most wants such a program, and is most likely to

make use of it. You need to understand the motivations that guide their

purchasing habits. Different consumer groups will have different priorities.

Their motivators will vary, as will the tactics that convince them to give

their loyalty to a particular brand. For example, the Nielsen study found

that in North America, 61% of respondents said a better price would be

most likely to motivate them to switch brands, service providers or retailers.

Yet in emerging regions, such as Asia and Africa, better quality was a top

motivator and price was less important.

Finally, you must craft strategies and offerings that satisfy those purchasing

motivators and create real value for the consumer. When customers feel a

loyalty program delivers true value, they will be more likely to make active

use of it, creating a level of interactivity and engagement that enriches the

customer-brand relationship.

61%

OF NORTH AMERICANS

SAID A BETTER PRICE

WOULD BE MOST LIKELY

TO MOTIVATE THEM

TO SWITCH BRANDS



Three Pillars of Successful ProgramsThe variety of companies employing rewards programs is as vast as

the diversity of consumers who participate in them. Yet whether the

sponsoring company is an airline, restaurant, credit services provider, bank,

mobile provider or retail establishment, the success of its loyalty program

rests on three universally applicable pillars: content, competition and

communication.

The most effective loyalty programs combine great content and engaging

competition that are communicated and accessed through multiple

customer touch points. All three elements must work in tandem, achieve

balance and complement each other. If one pillar is weaker than the other

two, the effectiveness of the program will inevitably collapse. When all

three work together in perfect balance, a rewards program can truly build

consumer engagement and brand loyalty. However, there appears to be a

steady base of consumers who, when faced with certain types of events –

a birthday gift or paying a neighborhood teen for yard work – continue to

regard paper checks as an effective solution.

It’s worth noting that recent advancements by Apple Pay and digital wallets

are better suited to displace existing card (and to a lesser extent, cash)

payments, rather than checks.

CONTENT

COMPETITION

COMMUNICATION



Pillar One: ContentIt may be a circular argument, but it’s true nonetheless: if you want to

generate interest in your content, you must provide interesting content.

While the demographics of your target audience will influence how you

define “interesting” for your program, certain fundamentals apply. Great

content is varied and robust, never bland and stagnant. It consistently offers

popular, most-desired products and services while regularly introducing

new ones. It holds consumer interest by blending aspirational products

and services with everyday items – a mixture that helps ensure consumers

interact with the program frequently.

Offering multiple and varied engagement and redemption opportunities

will ensure your rewards program is well-rounded. The quality of your

merchandise, incentives and other offerings, however, is perhaps even more

important. Quality products generally fall into two categories: aspirational

and every day.

Aspirational content secures interest. If your rewards program offers

merchandise (and it should, since studies show most consumers favor such

tangible rewards), you have a plethora of opportunities to offer high-level

content that will capture consumers’ interest. Offerings of hotel stays,

cruises and luxury items from high-end brands appeal to consumers with an

aura of exclusivity, and cultivate consumer perception of your program as

high value. Typically, redemption for high-end merchandise requires more

points and a longer time investment, leading to greater investment and

engagement from program participants as they work toward earning their

CONTENT



luxury reward. Consumers may undertake points-earning behaviors more

frequently in an effort to reach their goal.

Everyday products spur more frequent interaction. While aspirational items

grab consumer attention, everyday offerings maintain it. Product offerings

that require fewer points to redeem afford program participants quick – and

in some cases instant – gratification, especially when these are products the

consumer would be purchasing anyway. Apparel, home goods, magazines

and similar merchandise fall into the realm of everyday purchases for many

consumers. By offering a broad variety of everyday merchandise, you

elevate the likelihood of more frequent engagement as consumers come to

think of your program as their first stop when shopping for such items.

Most importantly, your program must deliver a feeling of exclusivity for

members. That exclusivity must also encompass real savings on both

aspirational and everyday merchandise that can be realized only through

program participation. Finally, be sure your merchandise mix includes both

discounts and freebies; 82% percent of North Americans say low-cost and

free merchandise is the most important benefit a loyalty program could

offer, according to the Nielsen survey.

82%SAY LOW-COST AND

FREE MERCHANDISE

ARE MOST IMPORTANT

BENEFITS



Pillar Two: CompetitionAmerican consumers are by nature a competitive lot, and everyone loves

to win. Incorporating an element of competition into your loyalty program

can create greater interest and excitement among participants. That drive

to win can motivate consumers to more frequently engage in behaviors that

will profit your brand. To create competition, your program must address

three key points:

Competitive opportunities also allow you to engage with a broader

range of consumers, including those who traditionally have lower levels

of participation in rewards programs. Finally, competition is a great way

to recapture and reinvigorate the interest of participants who may be

“hoarding” points due to apathy.

COMPETITION

VARIETY

Multiple competitive elements, such as daily

deals, auctions and sweepstakes, appeal to a

wider audience and provide more opportunities for participants to “win.”

STRATEGY

Create a plan to ensure your competitions

are fresh, varied and surprising. Mix things up with varying frequency,

timing, prizes and number of winners.

MULTIPLE CHANCES TO WIN

The more opportunities available to win, the more consumers will be likely to participate, and to interact

with the program more frequently. Multiple prizes also increase the perceived

value of the program.



Pillar Three: CommunicationContent and competition will be useless without effective communication.

It’s essential to promote the value of your rewards programs through

multiple channels frequented by each target demographic. Communications

should be relevant, timely and frequent – but not overwhelming.

In addition to traditional communication vehicles, such as direct mail,

communication strategies should also encompass digital channels. In

today’s increasingly digitized world, consumers are fully invested in mobile

access. They’re already communicating with their banks, service providers

and social networks through digital channels; they’ll expect to engage with

their rewards programs digitally as well, whether it’s through their desktops,

laptops, tablets, or smartphones.

It’s important to consider the content of your messaging when choosing a

communication channel. For example, while a desktop may better facilitate

extended browsing through a catalog of available rewards merchandise,

the mobility and screen size of tablets lends them to promotion of (and

participation in) program elements such as auctions or sweepstakes. The

audience targeted will also influence the communication channel you

choose. Younger audiences may be more open to mobile, while more

mature groups may still prefer direct mail or even a phone call.

Finally, don’t underestimate the importance of an effective customer call

center. While the majority of program participants may choose to engage

online, those who do call will be coming to you with an issue. A positive

experience with your call center can enrich the customer relationship and

cultivate greater loyalty.

COMMUNICATION



ConclusionsLoyalty programs are here to stay, and effective ones deliver value to

both consumers and the company offering the rewards. Loyal customers

are, without question, more valuable than disengaged ones. According to

Forrester, loyalty program members who participate frequently in their

programs are more willing to spend more for products and services.

When content, competition and communication balance perfectly,

a loyalty program achieves its goal – and creates greater value for

consumers and company.

WANT MORE INFORMATION ABOUT THE DELUXE LOYALTY PROGRAM?

Contact us today.

[email protected]

SEARCH www.deluxerewards.com

CALL 888.733.3110

Listen. Solve. Deliver.

50%

64%

mailto:deluxerewards%40deluxe.com?subject=

http://www.deluxerewards.com/

FI.Deluxe.com/solutions/bankers-dashboard/



About DeluxeSince 1915, Deluxe has been working hard as a partner for financial institutions to

drive deeper customer engagement and more profitable revenue. As the financial

services industry has evolved, Deluxe has been an active participant in shaping it—

with the calm assurance of a company that has done it before.

Today, thanks to collaboration, innovation, and acquisition, Deluxe has an ever-

growing portfolio of retail and commercial banking FinTech solutions focused on

helping our clients manage the customer lifecycle—acquire, onboard, engage, and

operate. Our growing array of inventive, client-inspired solutions are designed to

help our clients grow in a changing, competitive landscape:

• Data and Analytics

• Digital Channels

• Marketing Services

• Performance Management

• Rewards and Loyalty

• Fraud and Risk Solutions

• Check Programs

Learn more at fi.deluxe.com Follow us on our Forward Banker blog

http://fi.deluxe.com/

fi.deluxe.com/community-blog/

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WHITE PAPER Building the Three Pillars of a Best …...WHITE PAPER | Building the Three Pillars of a Best-in-Class Loyalty Program 3 To succeed, a rewards program must create value