Why is your loyalty program betraying you?
There's no "magic bullet" to turn around your loyalty program overnight. But to provide meaningful suggestions, we'll go over step by step process to help you identify the reasons behind the failure, and what you can do to improve its performance :
1 — Identify what caused the failure of your loyalty program
2 — Look beyond your loyalty program
5 — Check your loyalty programs' financial vitals
4 — Make changes to your loyalty program
Step 1: Identify What Caused the Failure of Your Loyalty Program
The first step to solving a problem is identifying and defining what that problem is. By identifying the root cause of your loyalty program's failure, you can determine the best course of action for reviving your program.
Reasons why your loyalty program might be failing you:
— There isn't enough perceived value to justify the cost of effort: The reward/effort ratio doesn't justify increased engagement. Customers must spend a significant amount of money to get only a small return. As a result, customers don't see the benefits of earning points or engaging with your program.
— Your rewards may be unattractive: If customers are not receiving attractive rewards for their increased engagement, they will lose interest. Since customers may view this additional effort as taking time out of their day and not really "earning" anything in return, it may seem to be a waste of time.
— You're not selling your program well: The customer cannot reasonably connect the reward to the effort unless they know about it. You must promote your loyalty program for customers to be able to link their actions with rewards, otherwise, they won't see any reason to get involved.
— One-size fits all approach: customers aren't created equal. Treating all your customers the same way is a common mistake many brands make. While one reward or engagement method might work for a certain cohort of your customer base, it won't necessarily work for everyone. Customers should be engaged in a way that is meaningful for their specific needs.
— No customer support and bad customer experience: The brand experience affects the loyalty program's success. If customers have bad customer support or negative interactions with your company, they will be less likely to engage with your loyalty program.
— Your business isn't improving transactional and emotional drivers: If your loyalty program doesn't address either transactional or emotional needs, customers may lose interest. Brands need to work on strengthening both their customer relationships and the customer experience overall.
— You're not measuring your loyalty programs' performance: You don't know how well your loyalty programs are working if you aren't tracking their performance. This means that whatever marketing initiatives you're implementing, you're likely wasting your time and money.
— You don't know what metrics to track: It's difficult for brands to improve their loyalty programs if they don't know what to measure. The metrics you track should be directly related to your loyalty program's objectives, and help provide insight into what efforts are paying off and which ones aren't. If you're not tracking the right metrics, then you'll be running your loyalty program blind.
— Poor customer experience during redemption: when you realize that each household has on average twelve loyalty cards, you begin to realize why it's important that the redemption process is painless. If the process of redeeming rewards is difficult and time-consuming, your customers will not be excited to redeem their rewards.
— Frequent program changes or inconsistency across channels/products/markets/etc. that confuse customers and decrease value for both ends (customer & business)
— You're rewarding more than you're getting: loyalty programs should provide value to your business as well as to your customers. If you're not getting more value out of the loyalty program than what it is costing you to operate, then your rewards structure isn't working for you.
— You don't have enough customer data: You can't measure your loyalty program's performance without customer data. If you don't have a frequent and accurate way of collecting this essential information, then the insights you need to make changes and improve your loyalty programs will be lacking.
— Your rewards program is too complicated: Customers don't want a complicated rewards program. Customers want to be able to see the immediate benefits of engaging with your loyalty program, and if they can't easily do that, they will be turned off and won't want to participate.