11 February 2025
Lance Walker, Former CEO of Loyalty NZ
The dictionary defines the verb engage as: involving a person or their attention intensely.
When it comes to loyalty programs, the intense involvement and attention of two groups of people is critically important; the customers who are members of your loyalty program, and the front line staff who interact with those customers. Getting maximum engagement from both is a key factor in loyalty program success.
Engaging your members
When I was involved with New Zealand’s largest coalition loyalty program, Fly Buys, we proudly claimed to have the highest number of members of any major loyalty program in the country. Around 75% of households were a member; which was pretty impressive. But the statistic that really mattered was how many of those members were actively engaged in the program.
Signing up members to your program is of course important; you want that to be as high as possible. But at the end of the day, that’s just the ticket to ride. It’s engagement with the program which creates the true loyalty impact.
In the case of Fly Buys, we determined that about one-third of the total membership were actively engaged. And in fact, globally, 30% is around the average level of active engagement in most loyalty programs. In broad terms it tends to be around a third of members who are actively engaged, a third who have some engagement (with potential to be more engaged) and a third who are unengaged (and have limited potential or interest in being engaged).
So what do we mean by an actively engaged member? In a definitional sense we mean a member who actively participates in your program (from both a points collection and redemption perspective) rather than someone who does so passively or only when reminded to do so. It is someone who responds to the loyalty program offers, promotions and communications you make, and who generally exhibits the loyalty behaviours that you are targeting. It is someone who doesn’t need to be asked if they are a member of your program; they will offer that up at the point of sale. It is someone who when asked what factors influence their buying decisions, will name your loyalty program in an unprompted way. It is someone who is an advocate for you and your program, and is likely to recommend the program to someone else. And ultimately it is someone for whom membership of your program is a factor is deciding to shop with you rather than someone else. In other words, an actively engaged member is a truly loyal customer. The higher the engagement levels the higher the loyalty impact.
All of which begs the question - how do you maximise engagement? There are 3 things I would focus on:
Integration
Integrating your loyalty program across all customer touch points and customer interactions. This includes not only sales and marketing channels but service channels as well. The more your customer interacts with, and can gain benefit from the program across all touch-points, the higher their potential engagement. This means doing more than just offering members points when they purchase. It means offering points for other behaviours you wish to reward, or offering special benefits only available to loyalty program members. If the program and its currency becomes integrated with, and integral to, the total customer experience, then engagement will increase.
Personalisation
The more personalised and relevant your communications, offers and rewards, the higher the levels of engagement. If I perceive that the program is speaking to me as an individual, and that what is being offered is relevant and of value to me, then I will be more engaged in the program.
Recognition
Rewards lie at the heart of a loyalty programme. They are the tangible benefit that a loyalty program member receives. They need to be relevant and valued. But don’t forget about the power of recognition. This plays to the emotional rather than the rational. We all have a desire to be acknowledged and recognised. The more a program recognises us and our status, the higher will be our engagement level. This has been critical to all of the many airlines programs around the world. Yes, collecting points and miles is fundamental; but the recognition that comes through status tiers is what drives engagement.
The ability to deliver on those 3 engagement drivers always comes back to one thing - data and insights. If you can understand more about the individual customer and their behaviours and motivations, then you have a greater opportunity to engage with them in a relevant and personalised way.
Engaging your staff
David Packard of Hewlett-Packard fame is quoted as saying “marketing is too important to be left to the marketing department.” Which in essence means that marketing is a whole-of-business function. I would say the same about loyalty; loyalty is too important to be left to the marketing or loyalty team… be that one person or a team of people.
Loyalty program success relies on everyone in the business being engaged with the program. And the most important people are those at your front line who are interacting with customers. Whether that is in-store, on the phone or via web-chat or social media, the influence of those who are interacting direct with customers is a critical success factor for loyalty programs.
There is a proven (and quite understandable) link between employee engagement with your program and customer engagement. The more engaged your staff are with the program, the more they will act as advocates for the program, and the greater the chance that your customers will then be engaged.
In thinking about front-line engagement we often default to training as being the answer. And training is very important. Ensuring your frontline staff understand how the program works, how to sign customers up, how they can redeem and so on is a baseline requirement. It will kill customer engagement if a customer asks a question about your program and it can’t be answered by those at the front line.
But functional training only take us so far. We need our front line staff to be excited about the program themselves. To return to our definition of engagement, we need to involve them and their attention intensely. How do we do that?
Some things that I have seen work:
• Training that goes beyond the functional: A lot of the staff training around loyalty programs is focused on the functional aspects - eg how to sign up or how to process a redemption. Important of course. But less common is training on the emotional aspects and engaging with the customer. There is a big difference between asking a customer if they are a member of your program and actually engaging in a conversation around the program.
• Incentives and Rewards: Competitions, incentives and rewards for staff are a very common way to engage staff in your program. Just as we are rewarding our customers for shopping with us, so to should we reward our staff for exhibiting the behaviours we want them to display. Competitions between sites can be particularly powerful.
• Mystery Shopping: Incorporate the loyalty program behaviours you want to encourage into mystery shopping programs. Once again, that mystery shopping shouldn’t just be about the functional aspects but around the emotional aspects of the customer interaction.
• Employee versions of your Loyalty Program: One of the best ways to engage staff in your loyalty program is for them to be members of your program. Often staff get special discounts just for being an employee, but consider how you could incorporate these into the program itself. For example a special VIP tier for staff, or a special set of rewards that only they can access. If they are seeing benefit from the program then they will be stronger advocates for it to your customers.
• Employee Loyalty Forums and Feedback Loops: Your front line staff are engaging with your customers every day, so give them formal opportunities to feedback what they are hearing and to be part of the development of your loyalty strategy. Some of the best ideas will come from the front line so providing opportunities for these to be heard and shared will increase engagement. Empower staff and give them ownership for the loyalty programme and its success.
Final words
We ask a lot of our front line staff, be that in-store or online. It’s not an easy job! But if you’re going to invest in setting up a loyalty programme it is important that you invest in ensuring that your front line staff are engaged with the programme and are ambassadors for that.
The more engaged they are, the more engaged your customers will be. And that’s our ultimate loyalty goal.
About the author
Lance Walker has spent 30 years working in loyalty programs and marketing. He is the former CEO of Loyalty New Zealand, which operated the Fly Buys loyalty program, and has served as Managing Director of two leading direct marketing agencies. Lance also founded and ran a specialist customer relationship marketing consultancy.
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