Up to 78% of customers aren't loyal to any particular brand, according to a recent Nielsen study. The market is saturated. Too many retailers are selling similar products, and as a result, differentiating themselves and capturing brand loyalty has become difficult.

More brands and retailers then are turning to engagement as a key differentiator.

Traditional Loyalty vs Engagement-Based Loyalty Programs

Traditional loyalty programs have centered on transactions—driving repeat sales from a single customer.

Engagement-based loyalty programs, on the other hand, are focused on rewarding customers for engaging with a brand or retailer, and providing various forms of user-generated content, such as product reviews, Q&As, or user photos.

Those tactics not only foster a relationship with the customer and the brand or retailer, they also amplify the voices of the most passionate and engaged customers, nurturing a community of repeat purchasers into brand advocates.

With this newfound focus on engagement-based loyalty, brands and retailers are employing interactive platforms to encourage engagement and better capture user-generated content.

Here are three questions to keep in mind when developing your own engagement-based loyalty platform.

1. What is your overall program branding?

One study found that 60% of retailers believe a more personalized customer experience is the No. 1 area of improvement in the industry—and loyalty programs are no exception.

Engagement-based loyalty programs should be consistent with overall messaging and strategy while they evoke a brand's unique personality.

Before developing your program, brands and retailers must have a firm grasp on the target audience, goals, and unique look and feel. Then, everything from the messaging and the graphics down to the program components like the badging or points system should fit into your branding and work seamlessly with your site.

Use industry standard methods such as CSS to ensure that customizing your engagement platform to support your brand's unique visual aesthetic is easy and painless. A loyalty program is an extension of your brand and thus should fit under the same branding umbrella.

One example of a brand currently mastering this concept is Staples.

To foster engagement, the office supply company created the Staples Boardroom, an online portal that allows customers to voice their opinions and experiences. Users earn points by leaving reviews, interacting with content from other users, and sharing that content on Facebook. As users earn points, they progress from intern all the way to CEO. From the badging system down to the graphic elements, such as the colored name tags denoting rank, the Staples Boardroom clearly ties back to the brand with a focus on garnering the opinions of office workers using their products.

2. What behavior do you want to encourage?

Another key step to a successful engagement-based loyalty program is determining the specific behaviors you'd like to promote and crafting your strategy around them.

For example, do products with more ratings and reviews convert better? Motivate that behavior. Are you looking to increase share of voice on social channels? Encourage customers to share photos or feedback of recent purchases on Facebook, Twitter, and Instagram.

When developing your loyalty strategy, identify the behaviors you want to encourage and then put incentives behind them. Understanding your goals from the start will help you determine the right criteria for how users earn points and rewards.

3. Does your program have the right mix of accessibility and exclusivity?

Another important consideration for engagement-based loyalty programs is the attainability of ranking. You need to have achievable, yet appropriate, badging and rewards. Ideally, the program you create will be part of your e-commerce presence for a long time to come, allowing participants to move up the ranks in reasonable time. Loyalty levels should not be so easy that consumers can breeze through them in a matter of weeks, yet they also shouldn't be so difficult that they deter people from even trying.

Some 70% of customers abandon loyalty programs because it takes too long for rewards to accumulate, according to CRM Trends. Customers need to feel that they're making progress while being engaged a long time.

An example of a brand successfully implementing all three factors is children's toy company Step2. The company wanted to create a platform that would provide authentic content directly from its customers. It created an online platform called the Buzz Board, where shoppers can rate and review purchases and share photos and videos. As participants contribute, they earn points and move their way up the ranks, from New Bee to Queen Bee status. As users accumulate points, they earn rewards such as credits that can be applied to future purchases. From the graphic elements of the Buzz Board, like the cartoon bees and fun colors down to the whimsically named badging system, the platform's branding is clearly aligned with Step2's target audience (parents, especially moms, with young children).

* * *

Ultimately, engagement-based loyalty is a two-way street. Participants can earn recognition, prizes and rewards, while brands and retailers collect valuable, authentic opinions and content from their most passionate customers. When implemented with these three questions in mind, engagement-based strategies create communities of brand advocates who drive repeat purchases and referrals through their advocacy.

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Three Questions to Ask Yourself When Establishing an Engagement-Based Loyalty Program

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image of Theresa O'Neil

Theresa O'Neil is the chief marketing officer at Showpad, a sales enablement platform that combines sales content, readiness, and engagement.

LinkedIn: Theresa O'Neil