A strong loyalty program can build brand awareness and recognition, which ultimately leads to customer acquisition. Mediaplanet interviewed Aimia’s Chief Marketing Officer, John Boynton, to find out how to create a successful loyalty program.

Mediaplanet: How do brands create customer loyalty?

John Boynton: Today’s customers expect tailored and relevant experiences. To meet their expectations and maintain their loyalty, companies need to focus on personalizing the value proposition.

Marketers can do this by using data and customer insights intelligently to offer personalized and relevant experiences and perks their customers actually care about. In turn, customers will see value in continuing to engage with companies that understand and anticipate their needs.

However, mapping customer journeys, understanding behaviour, catering to expectations, and ensuring seamless, streamlined experiences across all channels are all complex challenges that we and our partners face every day. The brands that have it right can inspire true loyalty.

MP: Does data collection play a role in the creation of the loyalty program?

JB: Yes, and a very important one. We live in a world driven by data and this is especially true in the world of marketing. The data value exchange should be the backbone of any loyalty program.

At the same time, Canadians are becoming increasingly aware of the value of their personal data. So when they share their data with brands, they have increasingly high expectations. We invest a lot in research to follow these trends. According to Aimia Loyalty Lens study, 41 percent  of Canadians highly value their data and 6   in 10 consumers expect better experiences with companies who they know hold their data. Companies need to pay attention to consumers’ growing expectations, lest they risk consumers turning off the tap of data and taking their business elsewhere.

In that context, loyalty programs are amongst the most tangible and voluntary means for consumers to get value for their data. Good loyalty programs leverage data collected from customer interactions to develop a deeper understanding of customers. Armed with this insight, they can personalize offers and interactions that both react to customers’ behaviours (eg.  what they’re doing and what they want) and anticipate what they may do or want in the future.

MP: Does customer experience factor in the creation of a loyalty program?

JB: Yes. Loyalty programs should always have a customer-first approach in order to properly engage with customers and improve their experiences. Good loyalty programs aggregate the right data from multiple channels to produce a holistic view of the customer journey, quality of experience, and customer expectations.

And different programs provide different experiences to consumers. Retail rewards programs like Shoppers’ Optimum, for example, offer discounts and options that appeal to people looking for day-to-day savings. Travel programs such as Aeroplan are tailored for people who want to travel, for which otherwise, they might not be able to afford.

As part of the customer experience, a loyalty program should be a companion to the customer, guiding them and providing offers, content, and advice that are actually relevant and unique to them. For example, to better understand what Aeroplan members want to do with their miles, we launched a goal-setting functionality on the Aeroplan website and app. When members enter their goals, we use the information to better tailor their experience in the program by providing custom-tailored offers or tips to help them accumulate more miles and make the most of the miles when redeeming.

MP: What is the state of loyalty programs in Canada?

JB: Canadians are passionate about rewards programs. According to our own Aimia 2015 Loyalty Lens research, 89 percent of Canadians have a membership in at least one loyalty program. According to other studies, Canadians are enrolled in 11 loyalty programs and active in seven on average. Many Canadians view loyalty rewards as part of regular life, incorporating them into their household and business budgets, utilizing their points and miles to purchase everyday items and plan for big redemptions, such as travel.

MP: Are they still relevant?

JB: Absolutely. For consumers, they want great experiences and better value, and loyalty programs are the most tangible way to obtain that. By sharing their data, consumers allow companies to focus on personalizing their experiences and offering them relevant perks they actually care about. For example, in the case of Aeroplan, members earn miles by participating in the program which enables them to travel for less without much effort as part of their day-to-day.

For businesses, loyalty programs help to drive sustained customer patronage by providing value. This is easily achieved by offering programs that help businesses to create better relationships with customers to engage, sell, and target relevant offers to consumers segmented based on their past shopping behaviours and preferences. Great loyalty partners should help clients with acquisition, onboarding, early life churn, repeat, adoption, frequency, recency, basket size, share of wallet, churn, and winback.

Based on a number of different reasons, ranging from budget and resources to target audiences, companies may choose to manage their own loyalty programs or join an existing coalition program. Joining an existing loyalty program has a huge advantage obviously if that loyalty program specifically is a proven expert at using data to drive all the above lifecycle programs and KPIs. In either case, customer experience must remain at the forefront.

MP: Do all loyalty programs offer rewards?

JB: All successful loyalty programs have a value proposition that is relevant to its members. It can be relevant rewards, discounts, vouchers, ability to earn miles/points, free shipping, personalized recommendations for products or services, next best advice, free gifts, and exclusive access to events/services/product launches, to name a few. But they don’t all provide the same value for consumers.

The challenge for companies lies in figuring out what customers actually want and how to drive loyalty. For consumers, the challenge is to identify the program with the greatest value based on their lifestyle and spending habits.

For example, when it comes to travel-oriented loyalty programs, it’s important for us to help consumers assess how Aeroplan stacks up against the others. To do so, we mandate a yearly third-party study to compare Aeroplan miles required to travel to other loyalty currency required with other travel rewards programs — before taxes, fees, and surcharges to make sure we are comparing apples to apples.

MP: Are there any misconceptions or myths surrounding loyalty programs in Canada?

JB: There is a misconception that loyalty programs are all about rewarding purchases and that they provide less value to consumers than cashback and direct discounts.

However, this ignores the fact that for most loyalty programs, the value increases with engagement and so, consumers have a direct influence in the value they get. Many programs provide ways to increase accumulation velocity: ie. opportunities for more engaged members to get more points or miles quickly.

At the other end of the spectrum there’s also a related misconception amongst some marketers that loyalty programs actually train customers to expect discounts and ultimately fail to engender loyalty.

A discount is just a discount, and those customers only attracted to discounts will always present a challenge for loyalty and retention, regardless of whether it’s through a loyalty program.

Good programs provide means for their customers to get more value from their engagement through a personalized experience and relationship, beyond being rewarded for repeat purchases or being encouraged to shop on discount. Customers see value in personalized recommendations and exclusive access to services, products, and events, for instance. Companies can use these perks to reward loyalty and engagement while avoiding the vicious cycle of endless discounting.

Today’s CMO is increasingly being asked to go beyond using discounts to acquire customers, and that’s why loyalty programs like Aeroplan can be the accelerator to help with that rapidly expanding responsibility.