How Embedded Loyalty Programmes Can Transform Customer Engagement

Loyalty programmes have seen various iterations over the years, all designed and tailored to increase customer retention and engagement and foster overall loyalty. Embedded loyalty programmes are the newest iteration of loyalty programmes which seamlessly integrate rewards and incentives at every step of the consumer experience. This not only enhances customer engagement but also provides a means and method of creating ever more personalised and customisable loyalty schemes for your customers.

Let us explore how these embedded loyalty programmes are transforming the industry by powering up and transforming customer engagement.

Digitalisation of Loyalty Programmes

The history of loyalty programmes is much longer than you might think, with the first instance of loyalty programmes in recorded history occurring at the end of the 18^th century. Bernard Crook, a U.S. retailer would provide copper tokens with each purchase, and these tokens could then be redeemed on purchases once customers had gathered enough. This was the first instance of using a loyalty or incentive scheme to encourage repeat business.

From there we next see innovation in the use of trading stamps by The Sperry & Hutchinson Company, where customers received stamps with purchases and those stamps were redeemable against products in a catalogue.

The process of using some form of record of purchase to entitle customers to free products later down the line began to catch on and culminated in the first points-based system, American Airlines’ frequent flyer miles.

Tesco introduced their Clubcard back in 1995 and the cards-based loyalty system began to grow in popularity, proving the continued success and growth of loyalty schemes.

As we reached the 21^st Century, digitalisation was not yet ubiquitous and so stamp cards and points cards continued to reign until the proliferation of mobile phones and the internet allowed companies to use mobile applications as a platform for their loyalty schemes. Starbucks led the way as one of the industry leaders with its Starbucks Rewards app launching back in 2009.

And the success of digitalised loyalty programmes has grown ever since and continues to grow to this day. As the world and consumers have caught up with the technology and integrated it into almost every aspect of their daily lives, the perfect platform has been created for a robust and embedded loyalty programme to take root and proliferate.

What is an Embedded Loyalty Programme?

Embedded loyalty programmes are integrated at every point of interaction between business and customer. This applies both to B2C relationships as well as B2B relationships, but is more common and familiar in the world of B2C loyalty programmes.

So whereas we used to use physical tokens to track spending and purchases, we then transferred to a points-based system stored out of sight and access of the customer and tracked solely by the business.

Digital loyalty programmes opened the way for customers to track, manage and understand the points they had collected and feel more involved and in control of the process.

Embedded loyalty is where we look not just at the points accumulated in-store, or the tracking of programmes via mobile applications, but consider how we can engage our customers and reward them for interacting with our brand through any and every platform available.

Embedded loyalty programmes seek to leverage the ever-connected world we live in, and whether customers find and interact with businesses through websites, mobile apps, social media, or brick-and-mortar stores, their loyalty programme should follow them seamlessly and even reward them for their interaction.

This in turn creates a kind of self-sustaining ecosystem in which it benefits the customer to remain in that ecosystem, using and working with the brand, for it rewards them and engages them at every stage.

What Benefits Have We Seen with Embedded Loyalty?

The options and benefits of this new way of looking at loyalty programmes are numerous and in a lot of ways bound only by imagination or intention. The benefits provided by embedded loyalty programmes are not only benefiting businesses but the customers too by offering customisable experiences, specially tailored discounts and rewards, and immediate feedback on how purchases translate into rewards.

• Enhanced Customer Convenience: Through embedded loyalty programmes we can create a seamless system that follows the customer wherever they go. Whether checking in on your social media posts, purchasing products through an online store, or browsing around a retail outlet, customers have access to their loyalty scheme and can accumulate and redeem rewards wherever they are. This level of convenience caters to one of the essential needs of customers.

• Improved Experience: The convenience of having easy and seamless access to their loyalty programmes improves the experience for customers. By making it integrated throughout their journey with your brand and personalising the experience along the way, the customers find the embedded loyalty programme much more intuitive, easy to follow and enjoyable to use.

• Customisation and Personalisation: Customers have the chance and opportunity to customise their experience, you can offer them different goals to achieve based on spending habits or budget limits. You can provide the option to customise the way their app and profile look and let the customer tell you what they want from their experience.

• Ownership: By providing the option to customise and making the experience personalised to each customer they feel a sense of ownership with the loyalty programme and with the brand itself, enhancing customer retention and fostering loyalty.

• Detailed Data Collection: One of the wonderful things about embedded loyalty programmes is the feedback between giving the customer more control to customise their experience, and then using their data to personalise their experience for them. Through a robust understanding of shopping habits, purchase patterns and so on, it is possible to offer ever more tailored and perfect rewards that keep customers engaged, loyal and returning to you.

• Customer Retention: Customers who use embedded loyalty programmes find the seamlessness of their experience, the perfection of personalisation, and the simplicity of the systems, to be engaging and rewarding which in turn encourages customers to come back for repeat purchases and develop a loyalty to the brand.

• B2B Partnerships: Applying embedded loyalty programmes to B2B relationships is particularly effective and allows businesses to grow from and support each other. By partnering with a finance service for instance, and encouraging and rewarding customers for using purchasing methods which utilise that financial service, you gain sales and customers gain rewards. This sends business to your finance partner through your service which keeps them wanting to work with you as a trusted partner. This in turn feeds back into benefiting your customers. It becomes a full circle in which everyone is rewarded.

What is Required for a Successful Embedded Loyalty Scheme?

To produce a successful embedded loyalty scheme requires a lot of expertise and a lot of planning. Let us look at some of the main elements required for constructing a successful embedded loyalty scheme.

• Advanced Data Analysis: To take full advantage of an embedded loyalty programme, a robust infrastructure geared towards data analytics is paramount. To handle the vast amount of data coming in from customers and being able to turn that into usable information about trends, or the perfect tailored reward, requires constant sorting and interpretation. Whether this comes from third-party software, a business partnership, or an in-house team, ensuring the analytical side of the venture is robust and complete is definitely a must.

• Integration: The defining feature of an embedded loyalty programme is its proliferation into every part of your business venture, so ensuring it is integrated into every platform your customers or business partners will be using is crucial.

• Personalisation: Once the advanced analytics are in place, those analytics must be used to create personalised experiences for each of your customers. The sense of ownership only comes when the rewards and offers align with a customer’s actual needs and desires and so the data should be leveraged in this direction.

What Might the Future Hold for Embedded Loyalty Programmes?

Embedded loyalty programmes are the natural progression for loyalty schemes as the digital age only continues to grow without any signs of slowing down. In the future, we could see the integration of augmented reality (AR), virtual reality (VR) and AI into embedded loyalty schemes. With the advancements in technology, it is not unreasonable to expect AI to become personalised shopping assistants, handling both the data for the business and the personalised and customisable experience for the customer. AR and VR can offer customers a chance to engage with, view and sample products without ever stepping foot into the store, transforming the world of online shopping and the future of loyalty programmes as we know it.

Conclusion

With embedded loyalty programmes taking centre stage it is important that businesses understand what makes them so special and how best to utilise this emerging system.

Embedded loyalty programmes seamlessly integrate current loyalty programmes across all avenues, whilst enhancing them with advanced data analytics to provide personalised and customisable experiences for customers every step of the way.

By leveraging this latest iteration of loyalty programmes, businesses can expect to see much higher levels of customer engagement, much more positive experiences with the brand, and so in turn higher levels of customer retention and engagement, which lead to greater growth for the business overall.

If you want to talk to industry-leading experts about the evolution of loyalty programmes, Loyalty Works are at the forefront of embedded loyalty schemes and would welcome the opportunity to take your business to the next level.