What Loyalty rewards programs can learn from online advertising?

Evolution of Loyalty rewards
Evolution of Loyalty rewards

Loyalty has played a key part in marketing since the 1920’s with Betty Crocker Box Top Coupons, to the 1980’s with Marlboro Cash, to today’s daily deal flash sales.

How has such a simple approach to customer engagement lasted so long? Simply put, they work. Even with the widespread popularity of these programs, customer loyalty programs have an opportunity to evolve by adopting new technology and practices from the online advertising industry and become exponentially more relevant, generate substantially more revenue, and create a better customer experience as a whole.

Enter Online Advertising
The online advertising industry, including Facebook and their ads platform, have invested in and implemented sophisticated targeting technology while utilizing data management platforms which have enabled advertising to maintain status quo with regards to ad performance, engagement, and ROI (return on investment).

To understand why ad technology advancements have had to evolve, look at the fact that consumers aged 18–40, myself included, have been brought up in a world that they are so overly exposed to advertising that it has little effect on us today. Thus, we are exposed to all sorts of advertising including re-targeted advertising (“yes, I know I was just on your website — why should I go back?- what do I get?”), social advertising (“thats great that Bob likes this brand, what’s in it for me?”), and demographic targeting (“I live in San Francisco so I must be in the market for a new computer”).

Even with these technological advancements, digital ad conversions have remained stagnant (if the tech wasn’t in place, ad performance overall would probably have declined). As a result, online advertising has started to leverage loyalty rewards because they offer substantial lift in ad engagement and ROI (We, Klick Push, worked with Zappos to give curated music to consumers across interactive ads — ultimately driving a 3X-4X increase in performance). When targeted loyalty meets targeted advertising, the results are incredible!

Enter loyalty programs
The inverse of what the online advertising world has been forced to adopt is true for loyalty programs: low investment in technology; high conversion, engagement and ROI.
Today, if you are a Fortune 500 brand, a coffee shop, a hotel, hardware store, an ANYTHING store — you most likely have a rewards program set in place -or at least some way to express appreciation to your best customers. There is a huge opportunity for loyalty programs to adopt some of the practices from the online advertising industry including its ability to be more dynamic, collect more insights, and drive data driven optimization.

Loyalty marketing can start by:
Optimizing in real-time for performance (if that reward doesn’t work, remove it)
-Target specific rewards to certain achievement levels (curated digital song vs. an iPad)
-Having interactive experiences (videos, music, etc.)
-Pushing rewards across different channels (digital ads, email, and social)
-Understanding the customer journey (user acquisition to customer retention)

While loyalty programs have been around for a while, their robust platform and static environments need to be rethought. Loyalty programs have a chance to reinvent itself by looking at the online advertising industries’ dynamic and innovative ecosystem. While online advertising isn’t perfect, the industry has rapidly evolved to stay relevant: it is extremely sophisticated in understanding consumer behavior. Furthermore, as loyalty programs evolve, it can supersede online advertising and lend itself to creating a better customer journey experience — whereby data acquired during the loyalty and retention experience can be seamlessly leveraged to enhance the customer acquisition experience.

In summary, when loyalty programs begin to adopt the learnings and best practices of online advertising, they will evolve rapidly as loyalty marketing is already more warmly received with consumers. An advancement in technology, data collection, and real-time optimization could reinvent customer loyalty programs as the, the gorilla in marketing. By embracing such advancements, customer loyalty programs could be the solution to a better customer journey experience across ALL marketing channels.

I am the Co-Founder and Head of Strategy and Partnerships with Klick Push, Inc. Klick Push is an engagement platform that enables marketers to incorporate dynamic digital music, which consumers can stream and download, across ANY marketing channel. Through our partnership with Reward Ops, any marketer can instantly add Klick Push’s technology — curated and dynamically optimized music to their loyalty programs.