Loyalty confusion: why customers don’t understand your loyalty program
Here at Goody, we’ve helped launch hundreds of loyalty programmes across the world. And despite working with some great brands, we still find marketers make a few common mistakes.
What starts off as a simple rewards program, becomes complex, the more features get added.
Keeping your loyalty program simple and easy to understand without trying to do too much too fast is the key to loyalty program success.
What is loyalty confusion?
Have you ever signed up to a loyalty program, but had no idea what you get back in return? Customer loyalty confusion is created by reward programs that don’t make sense or easily relay the membership benefits.
Causes of loyalty confusion
Introducing too many rewards, VIP tiers, earning or spending rules create loyalty confusion. The more elements to your rewards program, the more stresses placed on your marketing team to communicate the benefits. And the more that needs to be communicated, the more likely your communications will miss the mark.
How to keep your loyalty program simple
Simplicity is key.
You want your rewards programme to be about delighting your customer, not turning the programme into a sales pitch.
Keep your point earn structure easy to understand.
· $1 = 1 point
Your spending rules should be simple too.
· 250 points = $20 Reward Voucher
The more rewards you add to your programme, the greater the choice for the customer.
That might sound like a good thing, but having too much choice is hard to communicate and dilutes your reward value perception.
For instance, it’s much easier to communicate a single voucher, or a few cents off on fuel, than twenty product rewards your suppliers are trying to flog off!
Your loyalty program is not all about the rewards
Marketers pay too much attention to their reward programme structure, or the benefits you get as a member.
Yes, you’ll get your point junkies that can’t wait to scan their loyalty cards in the hope for that $2 discount at the next check out.
But your real brand advocates -- your most profitable customers -- want more than just the discount.
They want recognition for trusting in your brand.
They want to feel valued as a customer.
Keeping a simple value proposition
Customer loyalty isn’t created, it’s earned. And you can only earn more loyalty from your customers when you’re giving them value.
Your value proposition needs to be clear, simple and communicated throughout your marketing mix.
Now, if you think your business is tracking in the right direction, customers value your products, and you’d like to reward them for the repeat purchase, then it’s important to keep your program structure simple.
Typical programs incentivise customers based on activity or spend.
What works better, activity or spend?
This depends on the circumstance. In retail and hospitality, spend based rewards work best. Whereas event-based retailers i.e. theme parks. A simple check-in or visitation system works better.
How to fix loyalty confusion
Take a step back from your programme and eliminate any unnecessary complexity. The more restrictions you set on a customer’s ability to earn and redeem points, the less effective your programme will be.
Why a simple loyalty program is best
A simple customer loyalty program enables you to get to market sooner than expected. You can always enhance your loyalty program after it’s launched. Better yet, you’ll have a better understanding of your customers and how they’re responding to the programme and rewards.
Loyalty programmes always change, but it’s important that change is gradual and gets better over time, not worse.