Reward Program Strategy

10 Reasons Why Your Loyalty Program is Ineffective

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It is not enough to just have a loyalty program anymore. Research conducted by Fast Company found that in the U.S., there are roughly two billion loyalty program memberships. This is why organizations can no longer state a loyalty program as a competitive advantage, simply too many of their competitors also have them.

This being said, a loyalty program is still a very useful customer acquisition and retention tool. The reason that many customer loyalty programs fail, however, is because of poor implementation.

Here are 11 reasons why your loyalty program is not as effective as you had intended it to be.

1. Lack of Defined Goals

If you do not have your goals defined immediately when you implement your loyalty program, then it will be hard to ever determine the success of the program. How can you attain a specific goal if you haven’t even set it for yourself? It is not enough to say that your program is performing “well”. You need measurable statistics that can be compared to a standard in order to truly deem the program successful.

loyalty program is ineffective set goalsFrom the outset, define (and write down) the goals that you have for your loyalty program. This way, you can easily track the performance of your program over time. Compare your performance to the goals you have set for your program on a regular basis Your loyalty program goals have to align with overall organizational goals. If you have a goal for this fiscal year of increasing new customers by 25%, then your loyalty program goals should be set to help achieve this goal.

2. Don’t Have Enough Time to Devote to a Loyalty Program

A loyalty program isn’t something that you can throw together for your business. It is a long-term, organizational strategy that requires careful planning and execution.

loyalty program is ineffective invest time

Give yourself ample time to define the program goals, do research into your target market, and test different variations of your loyalty program. This way, when you do implement it, you will see that it is much more effective. A little time spent on the front-end will allow your loyalty program to perform much better in the long run. If you don’t have the time to devote to your loyalty program, then it is probably not the right time to implement one. Wait until you can give your full attention and devotion to a loyalty program. It will be a lot more effective and successful if you do so!

3. Customer Service Lapses

No matter how incredible your customer loyalty program is, its success can definitely be undermined with poor customer service. Your customers aren’t just loyal to your program, but to the entire experience that they receive when they interact with your organization. Exceptional customer service lays the foundation for customer loyalty. Leverage your customer loyalty program to attract new customers, and your fantastic products and customer service to retain these customers.

loyalty program is ineffective reps understand

According to Forbes, 71% of customers who ended a business relationship did so because of a poor customer service experience. This means that regardless of your products or your loyalty program, if a customer receives poor service, more often than not they will end their relationship with you. Provide customer service representatives with proper training, monitor their performance, and make sure they always go the extra mile for your customers. This way, you will be able to retain the individuals who became customers because of your loyalty program.

4. You Haven’t Done Research Into Your Target Market

You already know who your target market is, where they live, and the shopping patterns that they have. Use the research that you have already conducted to your advantage. Find out what actions they are likely complete in order to receive rewards. This will ensure that they program is utilized among the target audience.

loyalty program is ineffective true value

Going one step further, do some research and find out what rewards your target market finds the most valuable. Taking this information into account will make your rewards much more effective and increase engagement among your target market.

5. Your Program Doesn’t Stand Out From the Competition

You would be hard pressed to find a customer of yours that doesn’t belong to multiple loyalty programs. In fact, according to research from Fast Company, the average U.S. household belongs to about 18 different loyalty programs.

loyalty program is ineffective 18 programs

With so many loyalty programs out there, your customers will only remember and use the programs that they find to be the most valuable. If you are offering a loyalty program that mirrors one of your top competitors, your customers will not use loyalty programs to differentiate between you and will often only be swayed by price.

loyalty program is ineffective differentiate

If your customers see that your program is valuable, fits in with their lifestyle, and has advantages over the competition, there is a much greater likelihood that they will continue to use your program in the future. By making your program stand out, you can definitely improve the perceptions that customers have of your program and organization.

6. You Aren’t Using the Data That You Have

After you implement your loyalty program, you should track every metric that is associated with it. If you aren’t doing this analysis, you might fail to see emerging trends with your loyalty program. The data that you gather is valuable and gives you a comprehensive picture of the effectiveness of your loyalty program.

loyalty program is ineffective customer data

After analyzing the data, you might find that your loyalty program members use their points most on weekends. If this is the case, you could drive your loyalty program usage by providing customers with offers that call them to purchase on these days. If you don’t conduct this analysis, you could be missing an opportunity or failing to see a major issue with your loyalty program. Combine this data with consumer interactions and you will be able to get a full view of your customers and provide more personalized offerings accordingly.

7. Impatience

If you aren’t seeing major statistical increases in the first few months following your loyalty program implementation, it isn’t time to deem it a “lost cause.”

loyalty program is ineffective time to gain ground

Too often, when business officials see that loyalty programs aren’t producing short term results they feel that it is necessary to change some aspects of it. The most common change made is lowering the requirements to earn points. Although this may increase the usage of points from customers, it can cut your profit margins and decrease revenue.

As I said above, a loyalty program is a long-term organizational strategy. Don’t expect to see results from it overnight. Be patient, and the positive results you are looking for will come.

8. Not Using Social to Drive Loyalty Program Usage

You social networks connect you to thousands of individuals. These individuals choose to interact with you on social networks because they believe the information that you provide to them is valuable.

loyalty program is ineffective social media

As social networks allow you to be in contact with so many people at the same time, it is the perfect place to advertise your loyalty program. Include in your posts to social networks calls to action for your loyalty program. This will increase usage among active members and possibly entice non-members to investigate and join. Monitor what your customers are saying about your loyalty program on social channels. This is first-hand feedback that you don’t have to collect on your own. It will give you good insight as to how to improve your loyalty program to better suit the needs of your target customers.

9. Your Program is Too Complicated

Customers prefer to interact with loyalty programs that are simplified and hassle free. They don’t want to fill out extensive sign-up forms, read large blocks of text, or meet numerous requirements. If your customers are having a tough time understanding your program, they will become frustrated and will be less likely to join.

loyalty program is ineffective simple rules

As I said in my post 5 Ways to “Freshen Up” your Loyalty Program, a great way to simplify your loyalty program explainer page is to make it very visual. Zabisco found that 40% of people respond better to visual information than plain text. This pleads an overwhelming case for filling your explainer page with visual information rather than blocks of text. Not only should the explanation of your loyalty program be simplified, but the program itself should be as well. If customers believe that the requirements for earning points are too difficult or unattainable, they will not want to partake.

10. The Program Isn’t Promoted Properly, if At All

You have invested time and money into loyalty program that agrees with your target market, stands apart from the competition, and helps to develop fierce loyalty. But, all of this effort is wasted if you do not promote your loyalty program properly. On the homepage, in the product catalogue, and even on your blog, link back to your loyalty program. This will surely increase the program usage as customers will be constantly reminded of it.loyalty program is ineffective properly promote

Although this seems simple, it is often neglected by many organizations. Many times, loyalty programs aren’t visible on an eCommerce site until the customer reaches the shopping cart. This is a huge problem. If customers who visit your store do not know about your loyalty program right away, why should they check out your products/services? Instead, they will find stores who have prominent loyalty programs and purchase from them as a result.

Promote your program right, 5 places you need to be promoting your program!

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