The right mix between value to customer and value to business will alter the game

Focusing on customer appraisal
Affinity Partner Inc. has derived the key characteristics of successful loyalty programs and has identified five key factors of performance.

Loyalty Programs need to offer a minimum value in terms of a discount factor, to be considered as attractive. The earn- and burn options offered by the program contribute to the programs perception. Perception also plays a vital role in the customer appraisal. Frequent flyer awards are a great example where the perceived value of awards can be higher than the financial value. Programs need to be simple and relevant to many potential customers.

A program is considered relevant, if an attractive award can be redeemed within one year.

Creating more value for your business
Most Loyalty Programs focus on securing the customer base, leaving out the potential of all four levers to increase of shareholder value:

• Reduction of Various Costs
• Keep / Acquire Customers
• Increase Revenue by Customers
• Manage Partner Fees

The partner revenue stream is highly dependent on the number of program partners, their purchase of points and the negotiated rate per mile.

Cornerstones for all programs
Affinity Partner Inc. has conducted a unique benchmark study and has derived key recommendations for (re)designing a new and successful program from the most significant findings. The following recommendations should serve as cornerstones:

• Focus on value, choice, aspiration, simplicity and relevance evenly
• Include partners covering more of your customer every day spending
• Align yourself with travel partners or adopt some of their features
• Find creative ways to increase the perceived value
• Create awards where you have a cost advantage
• Align all marketing initiatives o Allow customers to self define the discount factor they experience o Address multiple target groups (segments) within your program
• Build on the perceived brand value of your company