Why you should invest in the ‘social’ aspect of your loyalty program

Staying Connected in the Downturn

Why you should invest in the ‘social’ aspect of your loyalty program

‘Social distancing’ is a concept that most of us had never come across before the outbreak of Covid-19. Now many people around the world are having to adapt their personal and professional lives radically to adhere to rules about staying at home and self-isolation.

Our human need for face to face communication and camaraderie has been put on hold indefinitely. But within days of ‘lockdown’ there was a surge in people using social media, video platforms, WhatsApp groups, Zoom and online community forums to work from home, to stay ‘virtually’ connected with colleagues, friends and family, and support each other through the current crisis.

According to academics, the term ‘social capital’ is the effective functioning of social groups through interpersonal relationships, a shared sense of identity, a shared understanding, shared norms, shared values, trust, cooperation, and reciprocity. The theory of social capital predicts that through levels of engagement within this network of relationships, individuals can gain access to resources and market information that would otherwise be unavailable. We are certainly seeing ‘social capital’ go into overdrive during these current uncertain and challenging times.

But how does ‘social capital’ apply to loyalty programmes?

There’s been a lot of debate in marketing circles as to what makes a successful channel loyalty program. Key elements, of course, include a competitive offering in terms of points, a generous effort to reward ratio, effective communications and robust digital delivery. 

However, the increase in of the use of ‘soft’ benefits to reward participants continues to dominate case studies about successful programmes. Soft benefits are non-financial rewards, which focus on creating attributes within the loyalty program that are difficult for competitors to replicate, whilst also creating value for the programme participant. A successful loyalty program must maintain the right balance between economic (hard benefits) and non-economic (soft benefits) structures.

Soft benefits also draw on a social dimension:

For example information exchange between loyalty program members, recognition and status identity, customer advisory panels, peer-to-peer gamification, product referrals. Thus, the membership of a loyalty program can be viewed as a social network, with members having the opportunity to interact with other program participants and employees operating the loyalty program. Firms can create value using social relationships both within their organization and amongst customer communities.

This ‘social capital’ is a valuable asset within your loyalty program to drive engagement of participants. Research indicates B2B loyalty programs that provide a sense of community, that focus on creating networks to promote information exchange, connectedness and access to resources, are far less likely to lose members to a rival loyalty program.  In other words, a strong social dimension is difficult for a competitor to replicate.

As the world adjusts to a new trading environment, where social capital takes on a whole new dimension, so must loyalty programs adapt to fill the face-to-face communication void. Now is the time to invest in developing the social aspect of your loyalty program.