By Adela Belin
Today, every brand has its own customer loyalty program. Whether you are a retailer or restaurateur, it has become imperative to have a loyalty program to reward and retain customers.
However, having a loyalty program should be more than a tick-box exercise. Your loyal customers need to derive value from it and truly feel special. After all, customers love to be rewarded, and it costs anywhere from five to 25 times as much to attract a new customer than to retain an existing one, so you make sure you do it right.
The question is no longer whether you have a loyalty program—it’s whether you are maximizing its potential to meet your business goals.
So, if you have a loyalty program and are wondering why you are not reaping the benefits you expected to, it might be time to reevaluate. Here are six common loyalty program mistakes you should avoid to stay ahead of the game:
1. No differentiating factor
Ask yourself, what is different in your loyalty program? Why should customers sign up for it? What are you doing differently for your loyal customers?
The “differentiating factor” occurs at two levels: one is differentiating your loyalty program from your competitors’ and second is differentiating your loyal customer base from the rest and making them feel valued.
The most common mistake businesses make is rolling out a “run-of-the mill” loyalty program. Your customers are likely to engage with your competitors, too, hence, you need to offer them something unique enough that keeps them coming back for more.
As per the 80/20 marketing rule, approximately 80% of profits are earned from the top 20% of your customer base. This shows you need to design meaningful, personalized offers that set your loyal customers apart from the rest. Best Buy does a good job when it comes to differentiating high spenders from the rest. It has created membership levels (My Best Buy, Elite, and Elite Plus), each of which have different benefits to offer.
It is also important to not get complacent and be left with a stagnant program. Constantly innovate and come up with interesting new offers to keep up with your customers’ buying behaviors and to better their experience.
2. Too complicated
From the onboarding process to redemption, the key is to keep it simple. The simpler your loyalty program is, the more effective it will be.
Starting with the registration form, don’t make customers fill lengthy forms and ask for a heap of information. The best way is to allow users to login through their social media accounts. This easily gives you access to their information without them having to fill it out.
The whole point of a loyalty program is to reward your customers, so make sure you genuinely reward them—whether it’s via cashbacks, exclusive discounts, special previews, or free gifts. Did you know that the number one reason behind people abandoning loyalty programs is because it takes too long to earn rewards? Look at Banana Republic, for instance. Customers can earn up to 5 reward points for every $1 spent, and for every 500 points earned, they get rewarded $5 and a host of other benefits. How simple is that?
The key is to be transparent in your communication, avoid having too many layers, and keep it simple, such that your customers easily understand how they will benefit.
3. Not measuring results
Every marketing activity needs to end with measuring results and effectiveness. How else does one learn from their mistakes and grow?
In the case of loyalty programs, you also must invest time in tracking the impact of your program. To begin with, it is crucial to understand how many new members you have acquired, what is the revenue your business attains from your loyal customers, and how many of your members are actively engaging with your brand.
4. Spamming customers
Did you know that 69% of U.S. email users unsubscribe from a business email because the organization sends too many emails? So, do not be that brand that spams its customers with innumerable messages and emails.
Instead, you should focus on sending relevant and meaningful communication to your customers. Communicate about important things, such as new offers, changes in your loyalty program, or keeping them updated on their reward status.
With the rise of personalization, brands need to take the effort to analyze customers’ buying behaviors and send them personalized offers, instead of doing a mass blanket communication. An example of a brand that’s acing personalization is Sephora’s loyalty program, which gets customers to fill out beauty profiles so that they can receive tailor-made promotional e-mails.
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5. Not going digital
Gone are the days when loyalty programs required customers to carry membership cards around. In today’s digital era, every business should embrace technology and incorporate it into their loyalty programs.
From going cardless to having a dedicated app for your loyalty program, digitalizing not only makes it more convenient for customers, but also lets you collect and analyze data to build relations with your customers and improve their overall experience.
One brand doing an excellent job with this is Starbucks. Its Starbucks Rewards is considered to be one of the most successful loyalty programs because of the digital experience it offers to engage and reward customers.
6. Not using data
Customer data is everything and loyalty programs are the biggest data mine there is. First, are you collecting data correctly, and second, are you making that data work for you?
Data helps you analyze buying behaviors and gives you key customer insights that can help you give customers what they want. Every customer is different and it is in your interest to offer them valuable, tailor-made solutions in order to set yourself apart from your competitors.
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