You Say Loyalty program; I say what’s in it for ME?

Waleed Al Toukhi

What does it take to be loyal? The simple answer is, Be NICE! Show your grateful.

Give me a reason to be loyal. The perfect loyalty program does not exist.

What is a loyalty Program?

Every other company and retail store offers a loyalty program these days to gain more and more loyal customers who can stick to their businesses long-term.

At times, you have to give your customers a reason to keep purchasing from you and to make this happen, companies tend to offer incredible discounts to regular customers. Now, it’s no big secret that these loyalty programs are an effective way to accelerate your business’s growth and boost profit.

As mentioned before, many reasons have led to the popularity of loyalty programs today.

No company wants to lose its current clientele at any cost. The goal of loyalty programs is to keep customers engaged with a company by providing benefits to them.

 Many loyalty programs are available today to hold onto their existing customers.

Are rewards enough to create loyalty?

Now, many people have a question in their minds: do the rewards increase customer loyalty? Or do the customers get sick of them too?

In the business world, customer rewards have been criticized as cheap advertising tactics, temporary fads, and giving things away for nothing; even though they have been in existence for more than ten years, more companies than ever are jumping on board.

Organizations invest thousands and thousands and hundreds of Riyals in designing and executing loyalty programs, such as Banks offering vouchers from partners, airlines providing discounts for repeat flyers, telecommunications companies lowering their prices to attract more customers, shopping centres and retailers offering exclusivity and various offers, 

However, in reality, reward schemes are frequently misused and poorly understood.

Too many businesses treat awards as impermanent promotional handouts or monthly specials regarding design and implementation.

Rewards can add value when used in this manner by encouraging current and potential customers to try a specific good or product.

But unfortunately, they won’t offer anything relatively close to their potential value until they are driven to develop loyalty.

If implemented as part of a larger loyalty-management strategy, a rewards program can shorten the loyalty life cycle by rewarding first- or second-year customers to act like the most valuable ten-year consumers.

A company must figure out how to reward customers in a way that is consistent with their loyalty value.

The goal must be to establish a system wherein customers are constantly informed of the advantages of the loyalty program and motivate them to obtain it.

A coordinated and long-term strategy is needed to develop loyal customer relationships that can survive for many years.

Various Types of Customer Loyalty Programs trending all around the world:

  •  Cashback Programs
  •  Refer a friend program
  •  Points program
  • Paid programs
  • Subscription Program
  • Free perks program
  • Mission-driven programs
  • Community programs
  • Tier-based programs
  • Spend-based programs
  • Gaming programs

Technology has made loyalty programs so much easier for businesses and customers.

Every brand has mobile applications where customers can use their phones to earn points or play games and get rewards.

Brands like Emirates Airlines, Starbucks, and McDonald’s have Gaming Programs and mission-driven programs that customers can use any time of the day to earn points.

It ultimately adds fun to the ordinary task of purchasing. For example, let’s consider Starbucks’ customer loyalty program.

Gaming Program by Starbucks

In 2016, Starbucks transitioned from a standard points system to a gamified system.

Before these modifications, every purchase made by a consumer earned them one point, regardless of the amount of money spent.

With the newly added tier component, the points program is expanded. Customers can now use their stars to purchase anything more than just coffee cups, such as an extra espresso shot or even specific items.

Consumers utilize a smartphone app to play the game, and Starbucks uses it to alert customers to opportunities to win bonus points. In addition, gamified loyalty programs stimulate subsequent purchases by making earning points entertaining and engaging for users.

Why do loyalty programs fail?

Now, despite all the hard work and struggles, why do loyalty programs still end up failing?

According to a survey by Capgemini, companies in the United States spend almost $2 billion annually on loyalty programs. But still, in the first two years, 77% of loyalty programs that only use a transactional model end up failing.

As you’re already aware, no loyalty program is perfect, and those who fail might also have some loopholes.

Now, let’s consider some significant reasons why a loyalty program fails. This failure can be of different types.

Maybe the news about your loyalty program hasn’t reached your target audience; you don’t have enough signups, or there may be something else lacking. So let’s look deeper into the issues that may be why a loyalty program fails.

1.      No Awareness

There is no reason to introduce a loyalty program if your customers do not know anything about it, or maybe the customers do not know how it works.

It’s evident that if your customers have no idea about it, they won’t be making regular purchases.

Therefore, giving your customers a clear understanding of how the program works is crucial.

Your rewards program should start with a simple “Buy X, Get Y” concept, from which you may add additional features and incentives. Starbucks Rewards functions this way, and 20 million users can’t be wrong, can they?

2.      Rewards are not appealing enough!

Another critical factor why your loyalty program is failing is that your rewards are not catchy.

It would be better if you kept the likes of your target audience and then made your loyalty program more appealing to attract an adequate number of customers.

Once your customers know the loyalty program’s value ratios, they will spread the news to other customers.

You should reduce the number of transactions or overall expenditure total necessary for claiming the prize and see if your consumers respond with a little more enthusiasm.

If this doesn’t work, you may need to reevaluate the benefits you are providing; perhaps your clients would be more interested in rewards of a completely different nature.

3.      No effective use of customer data

Effective use of customer data is not being made.

Through your digital rewards platform, it’s one thing to gather and keep client data, but if you don’t make the most of it, what’s the point?

Numerous loyalty programs fail because of wasted data, despite having access to essential information on customers’ purchases, frequency of transactions, and many other data points that can provide meaningful insights.

When properly analyzed, the information obtained through loyalty programs can offer customers a customized purchasing experience that deepens their emotional bond with the company.

Online shoppers can benefit from “free delivery” benefits, while regular repeat customers who frequently place the same order each time might cherish, for instance, a “Buy One Get One Free Offer.”

4.      Lack of experiential perks and benefits

A good loyalty program nowadays provides both soft benefits and hard benefits.

The “soft benefits” include airport lounge access, skip-the-line perks, in-app payments for faster service, and exclusive invitations to product launches and other industry events. In contrast, the “hard benefits” typically refer to discount coupons, free stuff, and transactional prizes.

Your loyalty program’s basic idea may be its hard perks, but the soft benefits keep customers coming back.

They give you social value and enable you to distinguish yourself from competitors.

Every company may profit from implementing experiential perks and rewards in their loyalty experience, regardless of the type of business they run or the nature of their client base.

Listed below are some Tips For Running A Successful Loyalty Program:

1.      Keep your loyalty program straightforward so your clients can readily comprehend it.

2.      Pay close attention to your data to avoid fraud. For example, limit the number of daily loyalty swipes if you can.

3.      Don’t forget to provide genuine incentives for your targeted consumers.

4.      A tiered scheme is one of the most acceptable ways to provide your top clients with better deals.

5.      Create efficient promotional offers for customers by experimenting with them.

6.      You must remind your clients to redeem their rewards. Send personalized email or SMS communications depending on customers’ purchasing patterns.

7.      Your team should be prepared and trained to promote the loyalty program enthusiastically.

Final Thoughts

While it’s true that perfect loyalty programs may not exist, companies and brands need to do their best by using their resources to design a program that promises high chances of success to make their business thrive.

You must remember that the main point of introducing a loyalty program is to give extra value to your customers.

If you’re doing it right, you’ll eventually see your customers rewarding your business with their loyal behaviour.

The best loyalty programs are indeed those that are customer-centric! Therefore, paying attention to consumer feedback for your loyalty program and overall customer satisfaction and fan loyalty is essential.

As you develop all the components of your customer experience, from your loyalty program to your customer assistance, pay attention to your customers and allow them to be your guides.

That is how you’ll see your business flourish!

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Waleed Al Toukhi

Waleed Al Toukhi

Marketing & Brand communication

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