- Traditional loyalty programs
have been centered on
transactional benefits.
But we've seen a shift
towards experiential benefits.
So does that mean that
transactional loyalty is dead?
We're gonna talk about
that in today's video.
So if you're in a store,
and you make a purchase,
chances are, you're going to be asked,
"Are you a member of our loyalty program?"
And if not, you're going to
be asked if you want to join.
The first question that
I always ask myself
in these instances is,
"What's in it for me?
"Why should I join this program?"
The problem is, most of these programs
start with the retailer in mind,
and they're not really providing
true value to the customer.
So as we think about
transactional loyalty programs,
points are the easy answer,
but oftentimes these use complex systems
that take too long to show value,
and that's why they can be
known as margin killers.
On top of that, everybody
has a loyalty program,
and they all look the same.
These traditional points-based programs
don't do a whole lot to
differentiate yourself
against the competition.
So customers aren't becoming more loyal.
That is why we're seeing a move
towards experiential benefits.
In order to run a
successful loyalty program,
you need to combine transactional
and experiential benefits.
Add experiential benefits to your program,
but also rethink transactional benefits
for an instant world.
Transactional benefits are
usually the first loyalty moments
that your customer
experiences with your program,
and they serve as a vital hook
not only in getting people to join,
but also retaining them as members.
Because your goal isn't just
getting people to enroll,
it's we want them to become active members
and stay engaged, and
become more loyal over time.
So remember, transactional benefits,
they make people feel smart,
and experiential benefits
make them feel special,
and you need to do both.
So here are some example of companies
that are combining instant
transactional benefits
with experiential benefits,
and they're doing a great job with it.
The first one is Restoration Hardware.
They provide 25% off all purchases,
but then they also add
interior design services,
and they blend those two.
And 90% of their purchases come through
their membership loyalty program.
Another new one is Lululemon's
premium loyalty program.
They're offering free fitness
classes, exclusive products,
free expedited shipping for online orders,
so all that combines
those two things as well,
so that someone is getting
experiences in store,
but they're also getting
those instant benefits
like the expedited shipping.
And this has been so successful for them
that they've raised the membership price,
and the program continues to be rolled out
across major cities.
And a final example here,
which isn't instant discounts
the way that we've been talking
about them, is Starbucks.
So they redid their
loyalty program recently,
to actually make sure that
even though they're
using a points program,
that people are able to
redeem those points quicker.
So it used to be able
to redeem for a coffee,
now you can redeem for a free
specialty milk or flavor shot,
and use those points at
a quicker, rapid pace
so that you're feeling
that instant benefit,
and of course they are one of
the most regularly used apps out there.
So as you can see, it's not just about
transactional versus experiential.
It's about using both types effectively
to create value all the time.
Remember, transactional
benefits make people feel smart,
especially when they're receiving
the benefit all the time.
And those experiential ones
make people feel special,
and they allow you to
really differentiate.
All the brands we mentioned
provide experiences to their members
that only they can achieve.
So at the end of the day, the
more emotional connections
you can make with your customer,
the more loyal they'll be.
And that needs experiential benefits
and instant transactional
benefits to achieve.
So if you want to learn
more about creating
real loyalty with your customers,
head over to claruscommerce.com.
