In the world of business and marketing, loyalty programs are perceived as a means to retain existing customers. When you think of how much it cost to acquire new customers, you would know that your existing customers are 50% more likely to buy a new product of yours and spend 35% more than new customers.
In this regard, you want to make sure you have a well-strategized loyalty program in place. However, while loyalty programs remain an efficient way to retain customers, some businesses keep getting it wrong, and as such, they don’t seem to work. So, in this article, we will be looking at some common and uncommon reasons why loyalty programs don’t work.
Loyalty programs burn out
Most marketers do not understand that loyalty and reward programs tend to burn out over time. To keep your customers invigorated and interested, you have to refresh your loyalty marketing formula every few years. Most managers haven’t changed their loyalty program for 2-5 years, and when customers start to tap out, they wonder what the problem is.
In this regard, you always want to follow trends and update your customer loyalty program as change is a constant thing.
Customers do not want cards
You see, when you are looking to uphold your customers’ loyalty program, you should understand that cards tend to have their place. While a card is a good idea, you should not make it a frequent gift. Endeavor to explore other means such as taking your customers’ phone numbers, emails, or names. Phone number or email is one of the best ways to communicate with customers and inform them of any new loyalty program waiting to happen.
Customers do not want to collect points
Most businesses get it wrong by allowing customers to accumulate hundreds of thousands of points only to realize that they can’t afford the offered rewards. In the best loyalty and reward programs nowadays, points are collected implicitly, and the program is mostly based on advancing subsequent levels. Customers tend to receive additional bonuses depending on the level they are.
In most cases, these levels are kept discreet or confidential, and the customer is then surprised with unexpected promos or bonuses like VIP sales, movie tickets, or a private consultant.
Discount rates are risky
Discount rates aren’t a good loyalty marketing strategy. While it may seem like a good idea, you should understand that it involves a strategic threat. When a company wants to improve their quarter or annual revenue, and they resort to discount rates, they will soon realize that it will undermine the legitimacy of their entire customer loyalty program.
A good way to avoid this is to offer values other than a simple price reduction. Strategic loyalty marketing programs tend to add great value to your brand and allow you to not only accumulate sales directly but you’d also get to know much more about your customers. Managers who have implemented loyalty programs successfully speak of them as a natural connector between online sales and offline sales.
Plus, it is the bridge to access detailed customer information that allows you to view your customers from a 360-degree perspective.
Lack of convenience
This is a mistake that most businesses make. If you must make loyalty and reward programs, you want to make sure that it is convenient for your customers to use. Understand that your customers don’t have to memorize an extra number or carry an extra card; you should be able to install strategic and automatable systems that allow your customers to leverage loyalty programs easily. Doing this will make your customers more liable to partake in your loyalty programs.
Lack of rewards
Now, while you may look at this as a funny reason why your loyalty program isn’t working, you should understand that when giving out rewards for loyalty programs, you shouldn’t offer only what you sell as a product or service. For instance, when an airline offers miles that can also be changed or converted to hotel stays on even free tickets, it strengthens their reward program.
Another instance can be seen in Amazon’s new program, which is termed Moment. This allows businesses to select from a variety of products for their customers. As a business owner, understand that variety is the spice of life, and it can also spice up your loyalty and reward program.
Loyalty is not bribery
Most business owners make the mistake of adding bribery to their loyalty program. When loyalty involves bribery, it diminishes the business ethics and customer expectations. You shouldn’t confuse loyalty with promotion, retention, and rewards, as this undermines brand equity more than it allows for new value opportunities. Businesses or organizations should have the courage and boldness to take their loyalty programs seriously. Loyalty here refers to ethics just as much as business.
Reward programs shouldn’t be used as a data-driven gimmick for capturing leads and new customers. It should be harnessed as a means to create a healthy relationship between consumers and companies. However, this only happens if the companies in question are willing to offer loyalty as well as asking for it.
Changing your loyalty program rules too often
Have you ever felt like you’re finally getting the hang of something, only to realize that the rules have changed on you? While this is quite popular in calculus or any mathematical topic, it is also common in loyalty programs. Yes, loyalty and reward programs aren’t meant to be permanent, but when you change the rules of your loyalty program so often, your customers tend to lose confidence in your brand. This is often perceived as instability and can shake your brand’s reputation as well as prevent your customers from enjoying the improvements you’ve made.
With what we’ve discussed, you should understand why loyalty programs tend to fail. You can also use the tips mentioned in this article to forge a loyalty marketing strategy that will help you develop better loyalty marketing programs.