It's no wonder businesses of all different sizes are turning toward loyalty programs in an effort to improve their bottom line. Just a 5 percent boost in customer retention rates can lead to anywhere from a 25 to 95 percent increase in profits. But as the number of loyalty programs continues to skyrocket, many businesses are looking for new ways to stay one step ahead of the competition -- especially when it comes to acquiring and retaining loyalty program members. Increased flexibility of currency could be the answer.
Consumers no longer want to be stuck spending loyalty points in the same programs they're earning in. In fact, 82 percent of consumers said loyalty programs would be better if they offered more ways to redeem loyalty points. Giving consumers the freedom to choose where they earn and burn loyalty points can improve both adoption and engagement rates.
Say a consumer heads down to their favorite coffee shop. With flexible loyalty programs, that consumer will be able to spend the points they've earned by purchasing coffee on rewards from a variety of other loyalty programs. Not only will this freedom and flexibility attract new members eager to earn miles and points in their favorite loyalty program, but it will also offer existing members yet another reason to remain engaged.
La Quinta Inns and Suites is the latest in a long line of brands that are taking steps to make their loyalty programs more flexible. The hotel chain's recent partnership with my company, Points, expanded its luxury property offerings for La Quinta Returns members from 880 to more than 11,000 hotels around the world. Loyalty program members can now use a combination of cash and points they've racked up to book a hotel in virtually any vacation destination. With thousands more redemption opportunities to choose from, prospective and current La Quinta Returns members have all the more reason to join and engage with the loyalty program.
In addition to securing new members and improving retention rates, more versatile loyalty currencies can also cut down on some of the costs and complexities associated with managing a loyalty program. For small businesses, developing a loyalty program that's capable of competing with big brands can prove to be difficult. But by partnering with loyalty programs that consumers already know and love, businesses can expand their consumer reach and loyalty program distribution.
Better yet, merchants won't have to spend time thinking about what rewards consumers are earning points toward in the first place. Partnering with a wide range of loyalty programs enables businesses to leverage the spending activity of a consumer in each of the other loyalty programs. If, for example, a consumer is only a few hundred points away from an all-expenses paid vacation, he or she will be much more likely to make a small purchase that puts them over the edge. These type of partnerships between loyalty programs open the door for purchases that might've never taken place if not for the ability to earn and burn points across multiple loyalty programs.
Loyalty programs are hotter than ever before. In the span of just two years (2013-2015), the number of loyalty program memberships rose 26 percent. Even more importantly, the average American household participates in 29 different loyalty programs. For brands interested in standing out from the thousands of loyalty programs available to consumers, the choice is clear --increase the ubiquity and flexibility of your loyalty currency. From attracting new members to boosting engagement with customers, loyalty currency that can be earned and spent in multiple loyalty programs stands to bring big business to brands.
Danielle Brown is the vice president of marketing at Points, a Toronto-based technology solutions company and global leader in loyalty currency management. Via a state-of-the-art loyalty commerce platform, Points provides loyalty eCommerce and technology solutions to the world's top brands to enhance their consumer offerings and streamline their back-end operations.