Are Your Customers ‘Over’ This Retention Tactic?

Loyalty programs used to be hot. Nowadays, some regard them as the parachute pants of the marketing industry. Meaning: They belong in the trash. Or maybe they just need a makeover?

Lauren Dowdle
November 28 2017

Those parachute pants that were all the rage in high school — or the shoulder pads you just couldn’t go out without wearing: They’ve got to go. Goodwill or the trash will be a great home for all of your outdated clothing and accessories. And don’t even think about making the argument that they’ll make a comeback.

And the marketing trend that’s now (mostly) a total snooze fest? Yes, we mean customer loyalty programs. Do they go out of style and eventually require a makeover?

Let’s start by taking a look at who’s using loyalty programs and why they’re important to get a better understanding of what works.

What’s the Purpose of Loyalty Programs?

Defined as a strong feeling of support or allegiance, loyalty is a vital aspect of customer retention. At its core, loyalty programs should be about creating a solid relationship between a customer and company that keeps them coming back.

So, it’s not surprising so many companies are offering programs to help boost loyalty and satisfaction levels — especially because they’ve been proven to work.

Just take a look at these loyalty program stats:

  • 89 percent of customers are enrolled in reward/loyalty programs
  • 71 percent sign up to receive money off purchases
  • 63 percent join to receive free products
  • 74 percent of Baby Boomers, 58 percent of Gen X and 41 percent of Millennials say they would be persuaded to shop with a business if they had a loyalty program

But to enjoy these numbers, you’ve got to make sure your program is living up to your customers’ expectations. And if it doesn’t, it’s time for a change.

Give ‘Em What They Want

To figure out if your program needs a complete overhaul, you’ve got to look at what today’s customers need and want. Yes, the basic idea of a loyalty program providing some freebie, reward or discount is still the same. However, how you should go about it has changed.

You can’t make the program about you. That sounds obvious enough, right? But you’d be surprised how many companies only focus on what the program will do for them.

There are benefits to a loyalty program for the company — that’s why so many use them. But if that’s your only concern, you’re missing the big picture, and customers will notice.

Customers want the program to be a way for the company to show it appreciates them and is loyal to them, not the other way around. A whopping 79 percent of consumers say brands need to demonstrate they understand and care about them before they’ll consider making a purchase. What better way to do that than with a valuable loyalty program?

Make sure you’re making their experience a priority and not an afterthought. You might have gotten away with not doing that in the past, but consumers have gotten smarter and expect more.

Why Your Program is Failing

Beyond making sure your program is focused on your customers, you also need to make using it worth their time. If you don’t, they’ll move on to another company that knows their stuff.

Example: Do they have to buy 100 coffees to earn one free drink? Or, is the reward a 1-percent discount? It’s hard to get excited about either of those scenarios — but excitement is exactly what you need for customers to use your loyalty program.

It’s no surprise some of the top reasons customers quit using loyalty programs is that it was too difficult to earn points or the program didn’t offer rewards they were interested in earning.

How to Give New Life to Loyalty

Ready to recharge your loyalty program and get it runway ready? Depending on your current setup, it may need some tweaks or major construction. But making your program better is well worth the resources. Because if you aren’t going to make it great, why do it all?

Here are ways you can improve your loyalty program:

  • Make it easy. People expect things to be instant and a click away. If you make the process difficult — like having a poorly designed app that takes forever to navigate or registering points is a nightmare — customers aren’t going to do it. Also, make sure your rewards and point systems are easy to understand. They need to know what’s required to start earning.
  • Go online. Give customers access to your loyalty program via your site and app. We’re well beyond punchcards.
  • Surprise them. We all want to be wowed, so add a level of mystery to your program. Randomly give your customers a bonus reward, or occasionally provide them with something besides the regular deal. It will keep them engaged and checking back for more.
  • Create levels. Think gold, silver and bronze. Your customers could start out on the bottom and move up when they make a certain number of purchases. The higher the level, the more and better rewards they earn. For example, a bronze customer may get 100 points for a purchase, whereas a gold customer gets 300 for the same purchase.
  • Ask for referrals. Bring in more customers by enticing your current ones to refer your loyalty program to their friends. If someone they refer signs up, they earn extra points. It’s a win for everyone.

Do I Need to Change My Program?

Depends. Is your loyalty program already meeting all of the needs mentioned for today’s consumers? Then it looks like you’re on the right track — for the time being.

If not, now is the time to start improving your program. You can even create a marketing plan around the launch of your updated program and offer special deals for anyone who uses the new features.

Even if you have the perfect program now, that can change as consumers continue to evolve. It’s your job to make sure you continue to offer something that provides value for your customers. So, get their feedback, look for ways to improve and never settle.

Lauren Dowdle

Lauren Dowdle is an award-winning writer and magazine editor based in Nashville, Tenn. Her nearly decade-long writing career has covered everything from landscaping to marketing — plus being interviewed by Jay Leno and winning a backhoe-operating contest. When she’s not behind the keyboard, you’ll find her spoiling her four furry babies and exploring the city with her husband.

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