Loyalty Program Failure

10 reasons why your loyalty program is not working

A rock-solid loyalty program can mean the difference between a customer shopping at your store or from your competitor. But with roughly two billion loyalty program memberships in the US alone, it’s hard to say it’s a competitive advantage. Still, your loyalty program can be an incredibly useful retention tool if used properly.

When a program fails, it’s less related to the technology used and more related to poor execution.

Here are ten reasons why your loyalty program is simply not making you money!

Lack of defined objectives

Without pre-defined goals of what you’re trying to achieve and how you’re going to measure it, how will you consider your program a success?

Unrealistic expectations

Just because you have a loyalty program doesn’t mean your customers will become loyal to you. Customer loyalty is earned, not created, and increases in customer retention boils down to a great marketing mix (product, pricing strategy, branding, promotion, location, service).

Too often, we encounter customers that think a loyalty program will deliver them new customers. Very rarely does this occur unless you’re entering a network program or scheme.

Time to devote to your program

A customer loyalty program is not something you can build overnight. It requires a long-term, thought through strategy. And with all strategies, it requires the appropriate planning and execution for it to be a success.

If you’ve tried building a loyalty program before only to stop using it after one year - then don't read any further. You should be advertising, not installing a loyalty program.

Customer loyalty is a long-term gain which needs time, commitment from staff and stakeholder buy-in.
Research as much as you can during this time to better understand what customers want from your program.

Lack of research

No marketing agency will understand your customers better than you currently do. Already, you should understand your target market, how customers interact with your business and their basic demographic information.

The amount of time we’ve heard “our customers are demanding an app based loyalty programme”, when their customer base is over the age of 60, still amazes us!

Doing your research properly will ensure your program meets your target audience’s expectations. Understanding what rewards would work best and testing this will ensure your customers are happy.

No visuals

Loyalty Program Failure

Keep your program visually simple to understand with no more than three steps required.

For instance;

Join – sign up to our rewards program and get a FREE Baseball Cap.

Earn – get 1 point for every $1.

Get rewards - reach 100 points and we’ll give you a $10 reward!

*Pro tip – make sure your points and rewards increment in either 1, 5 or 10. Incrementing points or rewards by anything else becomes really confusing for people to understand.

Program complexity

Creating or communicating a program that is complex to understand will deliver low engagement and slow uptake. Your program should be as simple as possible, with the least number of barriers to entry. Too often, businesses get caught up with capturing details about their customer rather than rewarding them for positive behaviour.

If you’re asking customers to register via a website, with multiple form fields, then you’re asking too much.

If your program contains hundreds of rules, terms or entry requirements then expect low signs ups and low engagement.

Lack of appeal

On average, customers belong to approximately 18 different loyalty programmes at a given time. With so many different loyalty programs out there, it’s important you make sure yours stands out!

If your customers can see value in your program, it’s easy to use and they can use it daily, there is a much greater likelihood that they’ll continue to use your program.

No data capture or utilisation

Data capture loyalty program

Once you’ve implemented your loyalty program, you should be tracking monthly metrics. If you’re not doing any sort of customer or revenue analysis, you might miss trends within your program or how your customers are responding to it.

Data collection about your customers gives you a solid understanding about where most of your revenue is derived.

Prior to program implementation, we see as high as 70% of customers abandoning after the first visit. And for most businesses, 80% of their revenue is collected from existing customers. So, the opportunity should be obvious.

Impatience and the desire for ‘quick wins’

Today’s retailer has little room for patience. But just because you’re not seeing results in the first few months of your program doesn’t mean it’s a lost cause. It takes time to build up your customer loyalty database and get your customers familiar with how it works.

Often, businesses revert to an “it’s not working” mentality - if they haven’t seen short-term results.
If you’ve been running your program for a while and it’s still not delivering, then there may be an issue with either; how you’re communicating your program and its value or the reward structure.

It’s crucial that all businesses understand that developing a loyalty program is a long-term strategy which requires commitment. Be patient, keep tweaking and you will see results.

Poor marketing communications

Your marketing is equally as important as your loyalty program. Relying on staff to sign up and communicate the benefits is not enough.

Ensure you have the appropriate online and offline communication materials to educate your customers.

Talk about the rewards! The fact is, no one cares about your loyalty program but they do care about the rewards.

Marketers should be using this to their advantage, especially in industries where you might not have a ‘sexy’ product – I’m talking industries like insurance and finance.

Instore marketing comms

Key Takeaway:

There are a ton of lessons businesses should consider when building their own loyalty program.

The key to building a successful one is making sure you have the right strategy from the start. Don’t blame the technology and don’t expect an overnight success. Good things take time and it’s important you dedicate the necessary resources to execute your program.

Keep things simple, visual and reward your customers how they’d like to be rewarded. That comes down to understanding your customer and ensuring your loyalty program is backed up by a good marketing mix.