For a lot of businesses with loyalty programs, it is essentially a race to the bottom against their competitors; Who can afford to give away the most (be it points, dollars, or freebies of some other description) in return for getting the least money in the door.

This ultimately is a game that no one really wins, and ultimately doesn’t really achieve much. If your nearest competitor is fundamentally doing the same thing as you in terms of rewards given for dollars spent, there your customers still have no compelling reason to come into your business versus your competitors.

So, what then is the point of a loyalty program. The point is to better understand your customer and use that to inform better decisions at macro (business wide), mid (business unit) and micro (individual customer) levels.

Use it to understand the cyclical nature of the way a customer purchases a product or type of product (which leads into a separate conversation on content tagging/categorisation), and in turn use that to either remind them to purchase, or maybe even up sell to the next model when they are getting close to their purchase cycle. That is being both personal and relevant!

If you’ve got a sector of customers who all purchase from areas A of your business, half of whom purchase from area B and half don’t then find out why. Maybe a targeted survey, or a special promotional offer from area B may pique their interest. In this situation, the survey should be designed as much to educate the customers that area B exists, is it is for you to learn why they aren’t purchasing.

Ultimately, a loyalty program should enable you to learn more about your customers, and in a highly relevant, multi-channel, and personal way monetise that knowledge. There are a number of ways of doing this ranging from the obvious (loyalty cards swiped at purchase) to the less obvious (secure credit card matching, email address matching etc). All the options have advantages and disadvantages.