What is the Difference Between a Loyalty Scheme and a Loyalty Program?

At Thirdscreen, we like to keep you up to date with the best practices and new info for mobile loyalty.
This blog post from Loyalty360 that will help explain the contributing factors and the difference between a Loyalty Scheme and a Loyalty Program.
Jim Tierney writes…

Is there a difference between a customer loyalty scheme and a customer loyalty program? According to a report from Australian-based customer communication solutions provider Salmat, there most definitely is a difference.

When many people think of loyalty, according to Salmat, they think of points-means-prizes reward programs accompanied by plastic cards. These schemes are typified by transactional exchanges, which earn some form of partial credit toward a future purchase. But for most consumers they do little to create brand loyalty by themselves. Greater convenience or lower price will still generally trump a plastic card and a promise of a future discount or reward.

Contrastly, the report says a strategic loyalty program comprises a series of initiatives that creates an exceptional experience for customers across every interaction they have with a brand – before, during, and after purchase.

“These programs go beyond transactional rewards to include added-value benefits such as extra product support, exclusive offers and events or a personal touch at the point-of-sale, and they create a consistent and differentiated customer experience fully aligned with the core brand offer,” the report says.

The different components, rewards, and communications that make up an engaging loyalty program and create an exceptional customer experience must be based on a deep understanding of a brand’s customers, the report says.

“You need to know who they are, what they value, and what they respond to,” the report says. “If you can achieve this without a card, then you’re at an advantage, but if you have to run a scheme to identify your customers and learn about how they interact with your brand, then you need to view it as one tool in your loyalty strategy or risk it becoming just another expensive marketing gimmick.”

According to Salmat, the first step in developing a loyalty strategy should focus on data: aggregating and mining what you already have, and putting mechanisms in place to collect insights you don’t have.

Most organizations have more data than they know what to do with, the report says: transactional data; contact information; market research; website interactions – all contain valuable information about who your customers are and what they care about most.

“The challenge is to build a holistic view of your customers’ cumulative interactions with your brand,” the report says. “Effective loyalty marketers will further enrich these data sources with demographic appends and social media activity, or by setting up voice-of-the-customer surveys to create a truly robust view of the customer from inside out and outside in.”

After a brand establishes a 360-degree view of its customers, the next step should be mining the data for key customer insights.

“What delights your customers? What do they care most about? And what barriers to purchase have you inadvertently created for them?” the report says.

“These insights will help you prioritize where to focus your efforts for the greatest customer impact,” the report says. “You may need to make it easier for repeat customers to check out online, or you may learn that your after-sales support doesn’t match the expectations created by your in-store experience and product pricing, pushing your customers to a competitive brand.”

Ultimately, the report says: “Customer loyalty is an emotional concept, while loyalty programs are transactional.”

To create true loyalty, the report adds: “Your brand must deliver a consistent and differentiated experience that your customers will value more than your competitors’ offers. You need a program in place to deliver this and you need to know your customers better than anyone else to do it well. That piece of plastic may be the tool you need to start this process, but it should be the start of your journey, not the destination.”

Find the orginal article here

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