Customer Loyalty Programs Part II: Tips for Sustainability & Success

Welcome back to our Customer Loyalty Program discussion. In Part I we outlined the types of programs your company can run. But we also noted that loyalty programs can fail—while consumers sign up for a lot of programs (an average of 29 per US household), they don’t use most of them. The average household is active in only 12 out of its 29 loyalty memberships. And remember that Capgemini Consulting tells us that 90% of social media sentiment on loyalty programs (across industries) is negative.

Today we dive deeper to make sure that your loyalty program is actually rewarding your customers, paving that road for higher value repeat customers.

Getting to Know Your Customers—What Do They Hate?

Let’s start by looking at the reasons customers get frustrated by loyalty programs. We’ll go back to that Capgemini Consulting survey for some answers, and the key mistakes to avoid:

1.  Reward relevance, flexibility and value. 44% of consumers find that loyalty programs don’t give them what they want because the rewards are too low, not useful or can’t be used the way they want.

⋅  Key takeaway: think about your customers and create a program for the people you are targeting.

2.  Multi-channel integration. 33% of consumers needed it to be easier to use their points in different places and wanted the coordination between online and physical locations to be better.

⋅  Key takeaway: make sure to sync your physical store, website and mobile apps. Have clear, easy and consistent ways to earn and use rewards in each of these places.

3.  Customer service. 17% of consumers had issues with wait times for customer service calls, unpleasant service, and customer service staff lacking the knowledge to fix problems.

⋅  Key takeaway: When planning your program, think about the short- and long-term resources that you need to give your customers the best experience.

Creating the Right Program For Your Target Customers

Knowing what you need to avoid is key, but so is knowing what your customers love. Keep these tips in mind when planning so that you end up with the right program.

⋅  Think about your brand. What brought your customers to you? Frame your loyalty program around the thing that your customers values most about your products and services. For some people that may be price but for others it may mean service perks.

⋅  Are your rewards valuable to your customers? If your loyalty program is $1000 spent for $1 earned, think about whether your customer will care or find that program nominal.

⋅  Personalize and segment your program among different customer groups. Use your customer information to target your loyalty rewards to the customers who want it most and in the way that is most valuable to that customer.

Running a Program to Make it Stick

A targeted, sustainable program needs to work in the long haul. Remember these tips to make sure your program stays at the top of its game:

⋅  Keep it simple. Don’t frustrate customers by making constant changes or getting too complex with new offers. Start with a simple program that customers understand—simple earning and simple spending. And then keep it that way even as you add touchpoints or offers.

⋅  Advertise so your customers know and remember the perks. Make your rewards clear and known to your customers. Think about where and when you can inform and remind them how the program works, including:

⋅  asking for signups when the customer is completing a purchase,

⋅  making loyalty programs part of your direct mail, display ads or social media advertising campaigns, and

⋅  creating a program outline on your website.

⋅  Send reminders when a customer is a near a reward. Buyers speed up their purchasing when they are nearing a payoff, so remind your customers where they stand via email, mobile app or website personalization.

Keep Track of What’s Working

Also central to a strong program: understanding what works and what doesn’t. Come back for Part III of our discussion and we’ll go over planning your program to collect actionable data.