Why Do Discount Programs Work So Well? The Engagement Formula That Leads to Loyalty

30 years. That's how long Access Development has been in business. A lot of companies in the loyalty marketing space have come and gone since then, along with what felt like great technological innovations that just never took off with consumers. Loyalty is a tough industry because it relies so heavily on consumer attitudes, which shift as frequently as the waves of the ocean.

Over those 30 years our model hasn't changed much. We contract with fantastic local and national merchants, then package those deals on behalf of our clients for their members/customers/prospects. Sure, technology has changed - mobile coupons are taking over quickly - but the basic concept has not.

So the question we get often is, "Why discount programs work?" Or "How do discount programs work?"

In other words, how has Access done so well for so long? How does a discount program result in customer retention?

Well, allow me to pull back the curtain a little back on our secret formula to engagement. In all reality, it's a formula you can apply to your own loyalty efforts, even if you're not operating discount programs. But we'll use our approach as the example:

1. Find an everyday habit that's common to just about anyone. From Access' perspective, the everyday habit we've honed in on is saving money. As many as 92% of Americans use coupons. Rich people use them, young people use them, mothers use them - just about any valuable demographic you want to reach is taking steps to saving money (just check out our collection of coupon statistics for more info). Regardless of economic turmoil or boom, people are always looking to save. Even better, most people look to multiple sources for deals. In other words, it's ripe for infiltration.

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2. Inject an organization into that habit. Loyalty is both identified by and a result of repetition, and we want to insert our clients into that money saving process. So we partner with those client organizations to build savings websites and private-labeled mobile apps, then that organization serves those up to their customers. The apps quickly become part of the customers' shopping/saving routine. This is where customer engagement begins, which is the secret ingredient to that repetition that results in loyalty.

We've essentially taken an organization that wants a deeper connection to their customers, and quietly inserted them into the daily routines of those customers. This constant exposure and engagement opens the doors for deeper messaging from the organization.

3. The organizations become part of the habit. Members use the discount programs on a regular basis, which means they intentionally seek out that organization for those deals. This means brands that would otherwise be largely forgotten are now part of the regular routine for their members. It works for organizations that need frequent interaction like banks, but it also works for brands that only see their customers on occasion, like insurance companies or education associations. That's the beauty of being part of someone's daily routine - the constant engagement pays off both short term and long term.

That frequent engagement opens the door to non-discount program-related communications. Emails get opened and phone calls returned because the customer trusts the organization.

Of course, this is a simplification of the process. There are other important factors, such as marketing the discount program to members to encourage usage. Access is also constantly working to sign more merchants and retain the existing ones - a difficult, unending task, but worth it because people love fresh merchant content.

How do discount programs help build loyalty? At the core it's simple: they usher organizations into the everyday routines of customers. They generate constant engagement and good will - the kind that eliminates second thoughts when the time comes for a customer to decide whether or not they want to continue doing business with that client.

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Topics: Customer Engagement, Mobile Coupons, Discount Programs, Member Benefits, Access Development, customer loyalty

Written by: Brandon Carter

Brandon is a former writer and marketer for Access Development. He's a frequent blogger on customer and employee engagement & loyalty, consumer trends, and branding. Connect with him on LinkedIn or Twitter at @bscarter

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