Originally posted on wirestone.com.

If stakeholders within your organization still view customer loyalty programs as purely a promotional marketing expense, or worse, a margin killer, they’re sorely mistaken. In today’s omni-channel retail environment, strategy-infused loyalty programs can be amortized across the organization to: fuel sales; inform customer insights; amplify brand awareness; accelerate promotions; and most importantly, to maintain an ongoing dialogue with customers.

Why do many organizations still shudder at the thought of implementing a customer loyalty program? Well, because they don’t understand the new mechanics of customer loyalty. Who’s doing it right?

Nordstrom’s Fashion Rewards program not only benefits the customer with “points” that can be redeemed with or for purchases, but they unlock services that play into Nordstrom’s core strength and brand promise: customer service. High-touch and valued services such as complimentary alterations, concierge service, access to exclusive events, free shipping, and more.

In exchange, Nordstrom creates a virtuous cycle of repeat touch points and purchases that feed a well-tuned database of your personal details and purchasing habits – amortizing the cost of acquiring you as a customer and better informing Nordy’s understanding of its customer segments. As a bonus, the customer is telling everyone that will listen about Nordstrom’s stellar customer service while wearing the goods they purchased from the store, by way of the web, app, or Nordstrom’s other businesses, Haute Look and Bonobos.

What’s so smart about Fashion Rewards? It’s focused on customer retention and lifetime value and not short-term customer conversion and ROI – both very important, but let’s remember to ‘protect the core’ while expanding the base.

Who else is doing it right? Foursquare.

Let’s face it, many web services would be dead if they didn’t remind us that they still existed. Foursquare was looking superfluous for a while, but then it struck a partnership with American Express that revitalized its relevance for Millennials – its core user base.

Foursquare not only used game mechanics to encourage repeat use, but its discovery tools dented Yelp’s armor by showing us both which businesses we should patronize and why. The incremental nature of Foursquare’s loyalty mechanics propelled it from a novelty to a platform that is now home to even more partnerships and service integrations … so much so that Facebook retreated from the “check-in” deals space.

Both of these companies are focused on creating value for the customer first and foremost and at each stage of the customer life cycle. Loyalty services are core to their businesses, and both firms are realizing gains in sales, utilization, customer feedback, word of mouth and digital social sharing, etc.

Getting customer loyalty programs right isn’t easy. Today’s omni-channel businesses need to espouse the multipronged benefits of customer loyalty programs across the constellation of decision makers within their organizations – from frontline salespeople, to the CEO, to the CFO.

If stakeholders within your organization still see customer loyalty programs as simply key fobs, gift cards, and coupons, they’re missing where retail and socially enabled businesses are headed. And soon, they’ll be missing their customers too.