A loyalty program is a rewards system that encourages customers to continue doing business with a particular merchant. Merchants offer loyalty programs as a way to gamify the shopping experience and build customer loyalty. The most common type of loyalty program is a points-based system, where customers earn points for every purchase they make. These points can then be redeemed for discounts, freebies, or other perks. Some merchants also offer tiered loyalty programs, where customers move up to higher levels based on how much they spend. Tiered programs often include additional benefits, such as exclusive access to sales or VIP customer service. Whether simple or complex, all loyalty programs share the same goal: to keep customers coming back for more.
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Data for today’s episode is provided by Mercator Advisory Group’s Report: How Payments Can Drive Better Loyalty and Rewards Programs
Strategic Gamification for Loyalty Programs:
- In gamification, reaching the “next level” not only earns the consumer the designated reward, but also unlocks the ability to earn rewards or benefits that are not yet available.
- Step 1: Incentivize Actions
- Step 2: Elevate Status
- Step 3: Provide Benefits
- Step 4: Promote Engagement
- Step 5: Inform With Data
About Report
Mercator Advisory Group’s most recent report, How Payments Can Drive Better Loyalty and Rewards Programs, provides insight into the new technology driving increased personalization and better customer experiences with loyalty programs, and the important role that payment data can play.
Traditional loyalty programs were a source of data for merchants, better enabling them to identify the repeat customers and track the shopping patterns by rewarding their repeat purchases. The digital environment now gives us an abundance of data that is captured in many ways and in many places, moving these programs to become a use of data that provides a better understanding of customer behavior and the more targeted rewards.
Strategic operating decisions that merchants make in key payments areas including orchestration, tokenization, and service provider selection will affect the ability of the marketing team to mine the loyalty data from payments and has the potential to either enhance or detract from the effectiveness of the loyalty program.
“This is a highly relevant and impactful report,” stated Don Apgar, Director of the Merchant Services and Acquiring practice at Mercator Advisory Group, and author of the report. “We are following this among a number of growing trends that are making payments a frictionless and invisible part of our everyday activities.”