Loyalty is the watchword for brands: how to build it, how to sustain it, how to monetize it. We all know the value of loyal customers, and companies now spend billions each year incentivizing them to stick around – 90% through some form of a loyalty program. Some of these programs have seen great success, while others… well, others have provided us with lessons learned… ‘bloopers’, if you will. And while bloopers can be funny to watch at the end of a cheesy movie, when it comes to loyalty programs they can be disastrous. Accenture’s 2017 research reveals that 77% of consumers admit they now retract their loyalty more quickly than they did three years ago.
Loyalty, clearly, is hard won and easily lost. When a consumer has a blooper experience with a loyalty program, it can a daunting task to win them back. Our series of articles (consider this “episode number 1”) will identify some of the most common “outtakes”, gaffes, and otherwise head-hanging mistakes that brands have made – and how they can be salvaged with a well-thought out “reshoot”.
Without further pause, let’s dive right into it and examine three major loyalty uh-oh’s we’ve seen time and time again:
NOT HAVING A GOOD (Rewards) HOOK
Let’s face it — loyalty programs live and die by the strength of their rewards offerings. Generic, uninspired rewards and bland perks can be a sure-fire way to earn a spot on the blooper reel. Worse, they can be active turn-offs, limiting a program’s ability to attract and retain customers. According to Colloquy’s annual census, 53% of loyalty program members abandon ship because of uninteresting rewards. In the realm of consumers, there’s been an enormous shift in the attitudes towards rewards, and what these incentives actually look like. The problem is, the world of brands and their loyalty programs have been slow to catch on. This not only creates friction, but if the reward doesn’t appeal to the consumer, they’ll either not engage or drop out of the program altogether.
How to Reshoot:
- Have Expansive Reward Options: Consumers know their worth, and expect loyalty programs to do the work of understanding their preferences and tailoring rewards that they would find truly aspirational — way beyond just discounts and deals.
- Let the Customer Drive Reward Choices: Giving customers the option to choose their rewards can be a huge loyalty booster.
- Acknowledge Value–add Offers: Discounts still work, but consumers are gravitating towards value-add offers. Everything from brand merchandise and swag, digital content, and even lifestyle or aspirational incentives, such as charity donations, are seeing an explosion in popularity, ultimately translating into securing more redemptions.
DELAYING (or even denying) THE EMOTIONAL PAYOFF
Not only do the reward offerings matter, but studies show that the process of earning them can make or break a customer relationship. Making consumers jump through hoops to earn points, changing the value of points, or allowing points to expire too quickly, effectively penalize loyal customers in ways they aren’t likely to forget – and can destroy any goodwill that may have been accumulated over the years. The most frequent complaints are that points take too long to earn (according to 57% of program members), and that they expire too soon. Brands should realize that customers who don’t hit targets to qualify for rewards are apt to hold it against them, and make fewer subsequent purchases.
How to Reshoot:
- Offer Points for More than Purchases: One of the most common and disastrous loyalty mistakes is the practice of only rewarding transactions. That not only limits engagement with customers (who feel like they only matter when they buy stuff) but also fails to acknowledge and encourage advocacy actions that can be vital to long term loyalty, like social sharing, store check-ins, writing product reviews, referring friends, etc… and even lifestyle-related behaviors that engender positive feelings towards the brand.
- Remind Loyalty Members to Redeem: Being responsive is not enough to promote loyalty – programs should send regular reports or follow-up by checking in from time to time. A study from Strativity showed that frequency of interaction builds loyalty and advocacy: 87% daily, 64% weekly, 49% monthly and 33% few times/year. You can then send personalized messages on special occasions, such as birthdays and anniversaries. Provide customers with consistent updates on the points they’ve earned, how near they are to having enough points required for redemption and ways they can earn points with your rewards program. This helps you stay front of mind with customers.
- Integrate with Consumers Lives: There’s nothing more immediately satisfying for consumers than earning points or rewards by engaging in a behavior that’s deeply entwined with their everyday lives. With the forward progress of loyalty platform innovations and tech, we’ve seen an increase in the types of behaviors that can be rewarded – now, everything from social sharing, user generated content, all the way to exercising with a Fitbit can be a valued part of the loyalty mechanics your brand is able to offer.
UNDERESTIMATING THE (Loyal) AUDIENCE
Many programs make the mistake of treating their members the same irrespective of their purchase frequency and amount – such as when new members are glorified and longstanding ones are ignored. One of the main reasons to implement a loyalty program is to identify high value customers, because they’re the ones that can literally keep a company afloat: Retail behemoth Macy’s recently revealed that 9% of its customers account for 46% of its annual sales. But many loyalty programs do not utilize their data to design membership experiences accordingly. As far as bloopers go, this is a big one: customers who have invested heavily in a company expect bigger rewards in return, and denying them this acknowledgement can engender disappointment, and even resentment.
How to Reshoot:
- Tiered Structures: Ensure to reward and distinguish loyal customers from the occasional shopper based on amount spent, or additional strategic thresholds.
- Personalized Perks: Customers desire to be recognized and rewarded as individuals, not as nameless, faceless points collectors: 49% of U.S. consumers feel loyal to brands that present them with personalized offerings and tokens of appreciation for their loyalty.
- Be Fair: It’s a problem when loyalty programs seemingly ignore loyal shoppers, but how do you actually classify loyalty? Contemporary thought suggests that simply belonging to the program isn’t enough, no matter what the time frame. Take the opportunity to reward members who make a true effort to engage, rather than focusing solely on length of membership time.
In this article, we have discussed three bloopers that threaten to undermine the success of your loyalty programs. These mistakes are all too common, but with careful planning and consideration, they can be avoided.
But the final act is yet to play, and until the credits roll, the story isn’t over: in our next article, we have three more common mistakes that many brands fumble with when executing loyalty initiatives.
So in the meantime – refill your popcorn, stretch your legs, and we’ll see you again soon!
IGNORING CONTINUITY (of Experience)
Although brands work hard to ensure that their voice, tone, and message is consistent across their communications, when it comes to the loyalty program experience, continuity is often an afterthought. Often, loyalty programs operate as separate entities entirely, with multiple logins, channel-specific authentications, and sometimes even a separate domain to engage with the program, making the entire experience a nuisance. Continuity of the overall loyalty experience – in terms of tone, offerings, and message – across all channels, is especially vital to keeping members coming back.
How to Reshoot:
- Enable Omni-channel Interactions: Enable customers to earn, track, and redeem rewards no matter what channel they’re using — i.e. brick and mortar, ecommerce, social media, and mobile — or what method of payment they choose. According to the Harvard Business Review, omni-channel customers “spend an average of 4% more on every shopping occasion in store and 10% more online than single-channel customers.” That’s too big an opportunity to ignore.
- Follow The Customer Journey: By “following” members as they switch from one channel to the other, loyalty programs can better understand and personalize their interactions with them — and avoid situations where inconsistent and off-putting standardized messages are sent out… for example, a menswear customer would not get targeted ads for women’s handbags.
FORGETTING THE HUMAN ANGLE (In Customer Service)
Great loyalty programs should put member experience at the center of all their efforts – but when loyalty program members have grievances, they’re often at a loss as to how to make themselves heard. Most companies have invested much more in sales and marketing than they have in the delivery of top-notch customer service, and all too often a general company hotline does not know enough about the specifics of the loyalty program to be of help. This blooper is traditionally overplayed – to major detriment. When a customer is wronged or disappointed, they feel the need to be heard, and social media gives them a megaphone — 44% of consumers admit taking to social channels in order to vent. As others hear about it, it can destroy a brand’s reputation and cause untold millions in PR damage.
How to Reshoot:
- Train Customer Service Reps Well: One of the major issues in how customer challenges are handled during the course of a service call arises when the customers are receiving assistance from a representative who is not familiar with the ins and outs of the loyalty program. Many companies simply recycle CS resources across all areas of their business. The problem is, with today’s loyalty programs growing more sophisticated and multi-faceted, dedicated representatives who are specially trained on how to handle questions on the program need to be made available to customers in need.
- Ensure Person-to-Person Customer Support: One of the key mistakes companies make in customer service is losing sight of the importance of human interaction, which remains a vital component of customer satisfaction — even in the ‘digital age’. Many over-invest in digital technologies and channels and lose sight of the reality that nearly all customers—even digital ones—find in-person support ultimately more satisfying than online service experiences. 83% of U.S. consumers prefer dealing with human beings over digital channels to solve customer services issues.
- Identify Members Across All Channels: Simple features can mean a lot for the customer experience — like ensuring that a single member ID can be used to identify the loyalty program member across all touchpoints. All channels should also make use of the data collected by the loyalty program to ensure that every touchpoint, as well as service agent, can call up the same, up-to-date data to resolve issues.
RECYCLING THE SAME OLD IDEAS
Many brands know how to get a consumer interested in a loyalty program by onboarding incentives; however, after that, their own interest can wane. It takes creativity, dedicated resources, and investments from IT and marketing to keep the program fresh with new features, content, and data so it can remain top of mind. A successful loyalty program stays tuned to customers’ ever-changing needs and re-evaluates offers frequently. Instead of approaching a loyalty program as a one-time set up, the overall mindset needs to change to realize that it requires constant updating, in order to refocus on a shifting opportunity landscape. Keeping customers in a virtuous loyalty loop is critical to spur both brand advocacy and sales.
How to Reshoot:
- Innovate Constantly: Innovation can be risky, whether because of cost or fear of alienating a current membership base, but companies that do take the innovation plunge can differentiate from competitors by keeping their customers constantly looking forward.
- “Surprise and Delight” is a huge part of a good loyalty program, in which milestones are rewarded during customer journeys, not just at their peak. 59% of consumers ‘feel loyal’ to brands offering them small rewards – like gift cards and personalized discounts – because of their loyalty.
- Eliminate Pain Points: Programs must go beyond an earn-and-burn scenario; the ones that keep customers loyal solve problems, ease customer pain points or answer unmet needs. The data generated by a loyalty program can help identify the pain points to eliminate and the passion points to amplify—and be a tool for eliminating friction in the customer experience.
It’s never too late to call for “take two”:
The bloopers we’ve discussed offer some reasons why only 46% of U.S. loyalty program memberships are active. But experience tells us that there are still options for brands to win back disappointed members. According to Accenture, 80% of customers who left a brand felt that they could have been enticed to stay.
Beyond the suggestions we’ve made above, brands would do well to have plans in place to win back members who have been put off by their mistakes. Ignoring a churned population is underusing valuable loyalty data and throwing money down the drain. Historical purchasing data can be used to personalize special offers to remind former loyalists of their support.