4 Reasons you Customer Loyalty Program isn’t working
A good customer loyalty program can be a very useful customer retention tool if it works properly, but it’s also an investment that can quickly turn into wasted time, effort, and money, taking your attention away from the shop floor.
Before even starting on the loyalty program journey, many loyalty initiatives fail at the approval stage. It’s often a case of ‘our competition is doing it, so we should do it too’. Lack of clear strategy and business objectives with your rewards program will lead to a poor return on effort.
Without a solid business case including a well-developed roadmap, robust financial model, clearly aligned success metrics, and the buy-in from other departments, it’s unlikely that stakeholders would be willing to invest in any loyalty program.
If you already have a loyalty program, for all your market research into what kinds of rewards would ensure the highest customer engagement, what is your actual ROI? Or, are you essentially bribing them with lower prices to come back?
In such competitive times, is your loyalty program genuinely feasible as a marketing effort?
Is this why up to 77% of transaction-based loyalty programs fail in the first two years?
4 Main reasons your Customer Loyalty Program isn’t working:
1. Lack of Integration and Difficult to Use
Does your loyalty program integrate well with your POS and other essential business systems, completing the cycle with automated rewards delivered to mobile phones?
Do your customers know how it works, with easy access to information and support?
Extensive sign-ups with apps that aren’t user-friendly could lose you customers, instead of gaining new ones, in effect: supporting other stores with more user-friendly loyalty apps.
How well-integrated is your loyalty program with your other marketing strategies? And what about the wide array of popular payment options available today – can your program keep up?
Customer loyalty programs with a low level of integration into your systems and your customers’ preferred payment systems are unlikely to be successful.
2. Unattractive Rewards
Most loyalty programs offer insignificant and/or infrequent rewards and represent low share of wallet. More attractive programs encourage more loyalty from customers, with brands or retailers deriving a higher share of wallet.
For example, with points-based programs, by the time customers acquire enough points to earn a meaningful reward, they’ve already forgotten that they have your card.
Static proposition
If you’re offering the same rewards you offered a year ago, your loyalty program is in desperate need of an update or customers may start looking elsewhere for something fresh and innovative.
Lack of personalised offers/rewards
That said, are you offering your customers what they want? Have you bothered to find out what kind of rewards would encourage their loyalty?
While many shoppers are content with cashback rewards and notifications on their apps as to the latest specials, these don’t necessarily foster loyalty. In fact, these may well be teaching your customers to shop around to find better specials and better rewards. Think about it: you’re educating shoppers to be loyal to low prices, which is the exact opposite of loyalty.
Customers enjoy the feeling of exclusivity and significance when becoming a member of a loyalty program, but a lack of meaningful dialogue with your customers and individual tailoring soon leads to the feeling of, “You don’t know who I am!”, which in turn leads to apathy and a lack of customer engagement.
Are you pushing ‘dumb’ offers at large segments of shoppers as opposed to using your data to enable a conversational marketing dialogue with your customers?
Modern technology using AI and machine learning can automate individual conversations in the form of offers made at scale, a feature used increasingly by tech-savvy marketers.
3. Dirty Data or Poor Use of Data
Good loyalty programs are based on good data in order to build good relationships with customers. Very often, this is data you already have but don’t know how to fully utilise.
This is the very data that can, for instance, allow you to make targeted product recommendations in order to keep customers engaged. According to recognised research, “customers that are actively engaged with brands and their loyalty programs make 90% more frequent purchases, spend 60% more in each transaction and are five times more likely to choose the brand in the future”.
BUT the reverse is also true. If you cannot trust your data, you cannot create accurately targeted campaigns. The lost opportunities and wasted resources on dirty data (e.g. 00000000 as a contact number) will cost both time and money in the long run.
4. No Demonstrable Behaviour Shifts
Many loyalty programs mistake habit for loyalty. While advertising and marketing ‘happens to’ customers involuntarily, loyalty programs allow customers to ‘opt-in/out’ of a program, already creating an environment for active engagement with customers.
Many programs fail to utilise the opportunity and rely on their customers’ habits instead of creating opportunities to shift behaviour while measuring and analysing these shifts in order to create more.
If your customer loyalty program is making any of the above mistakes, it may be time to move on to the next generation of shopper marketing in the ‘beyond loyalty’ era?
We’re now in a phase of hyper-personalisation, enabled by Big-Data, Distributed Processing Power, AI, and Machine-Learning.
Speak to us today about a unique approach using a combination of these technologies to build exceptional customer relationships that put your existing data to work for you, so that both you and your customers receive maximum benefits.
