5 COSTLY MISTAKES TO AVOID WHEN BUILDING A CUSTOMER LOYALTY PROGRAM

Customer loyalty program is becoming more popular by the day in the business world. It seems many business owners have now discovered that spending money to bring in new customers is not as much necessary as retaining the existing ones. 

Both small retail businesses and large enterprises are already operating a customer loyalty program in their different capacities. Those who do not have a working loyalty program seek ways to create a program through which they can entice their loyal customers with mouthwatering rewards to retain them. 

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Of course, a customer loyalty program can be an excellent asset for a company. It can help boost customer retention and as well as draw new customers. From wherever perspective you look at it, creating a loyalty program is a win-win matter for any business. 

Research showed that Loyalty and rewards programs alone influence customers’ decisions by about 70%. It’s no secret that loyalty marketing programs help companies in the digital economy boost profit. 

However, many customer loyalty programs have failed due to some shortsighted predictions about their customers, which end up hurting their finances and disappointing their customers. Truthfully, most loyalty marketing programs thriving today have once experienced a considerable setback. While some only struggled to balance for a while, others have become a thing of the past. 

It may be shocking to you that Microsoft, Airbnb, and a few other reputable companies have once failed to establish their loyalty and rewards programs. However, most of them have gained the right experience and made necessary adjustments to become what they are today.

Though experience teaches better, you can learn from other’s mistakes to start your loyalty program on the right track. This article provides practical examples of costly mistakes that some businesses made when creating their loyalty programs to help you stay clear of critical blunders that can deter your customers instead of attracting them.

Whether you are just starting your loyalty program or already having one that is not driving results, you need to be aware of the following mistakes.

1. Offering inadequate rewards

Sometimes, it is better not to offer any reward than to provide something that is not useful for your customers. Yes, rewards can attract your customers but can also deter if it does not serve their needs. 

It is crucial to note that the company does not decide the reward; it is your customers’ exclusive demands. Whether your goal is to motivate your customers to make more purchases, re-activate a subscription, or refer a friend, what your customers’ ultimate wants will always make the best reward.  

This implies that you need your customers’ needs and wants at the center of your planning when creating a loyalty program. Most companies choose rewards based on comfort, price, social trends, and more, which often disappoint their customers.

You can afford to waste your time and effort on things that your customers wouldn’t appreciate. So, ensure you make thorough customer research to truly understand your customers’ ultimate needs and when they needed them the most.

A practical example of a dissatisfying reward is when Microsoft Xbox Liver rewards one of their loyal gamers $0.25 on his birthday. Most of their customer took it to their official social media platforms to express their dissatisfaction. Indeed, that was off the radar. It will have been better if they reward those gamers with a few in-app features that will excite them. 

Most brands spend a substantial amount of money on useless rewards. Ironically, the most valuable rewards are less expensive.

2. Your program is too complicated 

When your loyalty program is too complicated, you scare away your customers from participating. Customers like participating in a program that is straightforward and easy to access. 

Put your customers through the stress of visiting multiple pages of your website, filling several long forms, and analyzing a confusing chart just because they want to join your loyalty program. They will give up in the process and join another program elsewhere. 

Your customers want to signup to get rewards, not to apply for an online professional course. So, be kind enough to make everything simple and easy for them from beginning to end. https://media.istockphoto.com/photos/computer-error-picture-id1222806141?b=1&k=6&m=1222806141&s=170667a&w=0&h=9uU0SLwwCEd6gpvtbJm3xFvZvJHrYELbS5rIeK3a4_o=

You don’t need a program that will require special tutoring to use. Indeed, the most successful loyalty programs are the simplest ones. 

3. Not promoting your program. 

You will be lying by assuming that your loyalty program will promote itself. Unfortunately, most companies underrate this fact and, of course, face the consequences. Check around; you will hardly see a promo for a loyalty program.

Often, many companies believe that the mouthwatering rewards they offer are enough to drag people to participate in their program. That is a dangerous misconception. Even Airbnb, a global giant, face the music when they refuse to promote their program – not even their staff are aware of the program. 

It is good to create a customer-engaging loyalty program, but you and your employees might be the only ones to know about the program’s existence without proper promotion.

4. Not knowing your ROI

One of the extreme errors you can make is not knowing how much the program is costing you. You need to whether your investment in your loyalty program is paying off or not. Sit down to check the difference between how much you are investing and how much sales and customers it brings.

5. Inaccurately segmenting customers

Customer segmentation is one of the primary goals of loyalty programs. You are trying to categorize your loyal customers according to their age, gender, buying habits, and more to know what can best appeal to which group of customers. However, this action can bring massive damage if you get any of this information wrong. 

Imagine you are a 40-year-old man and the store where you are buying sends you a female shoe on your birthday. It can show that the company does not know your gender. As little as this may seem, it can be a reason why some customers will stop patronizing your business. 

In Conclusion 

Customers can be hard to please if you are ignorant of what they want. While you are trying to impress your customers, be careful not to make costly mistakes that can put the entire program in the gutter. Avoiding the above-listed errors will guide you through creating a reliable and profitable program. 

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