Are Your Loyalty Members Loyal?

Most retailers and restaurants who offer a loyalty program would probably say yes. Because if a consumer is interested in joining your loyalty program, then they intend to use it, right? With the average U.S. household being enrolled in more than 18 customer loyalty programs, it would seem that consumers are indeed fully onboard the loyalty bandwagon.

The truth is that enrollment and participation are two completely different things, and one does not guarantee the other. Moreover, enrollment also does not guarantee satisfaction with the program either. In fact, a research report from Capgemini Consulting entitled ‘Fixing the Cracks: Reinventing Loyalty Programs for the Digital Age’ found that participation rates in loyalty programs are very low, and that 89% of social media opinions about loyalty programs are negative. Capgemini looked at the loyalty programs of 160 global companies across 7 sectors: Retail, Banking, Consumer Products, Telecom, Airlines, Hotel Chains and Consumer Electronics and analyzed 40,000 consumer conversations on social media. The negative social media sentiment about loyalty programs stemmed mainly from rigid reward structures, the lack of reward relevance, and user experience issues with digital channels.

So how can you ensure that your loyalty members not only become active, but stay active, and ultimately love you? You can start by examining your loyalty program to ensure that it doesn’t contain any of the pitfalls listed above by incorporating the following practices into your loyalty scheme:

Provide value beyond traditional rewards

Capgemeni’s research revealed that most loyalty programs follow a basic transactional philosophy where rewards are based on purchase. Only a small minority of programs recognize and reward consumers for engaging and interacting with the brand in other meaningful ways:
• 97% of loyalty programs are based primarily on purchases made by consumers
• Only 16% of loyalty programs reward customers for activities, such as taking online surveys, rating and reviewing establishments or referring friends to the program
By rewarding more than just purchases or visits, including social media interactions and advocacy, you’ll automatically refocus your strategy on customer engagement, rather than isolating it to transactions, which is key to a successful loyalty program.

Deliver personalized and relevant customer experiences

The research also revealed that merely 11% of loyalty programs offer personalized rewards based on a customer’s purchase history or location data. With such a lack of basic personalization, it’s no wonder that brands are not getting their loyalty members’ attention, never mind sustaining it. By being relevant and offering advanced levels of customization and tailored experiences, you can stand out from the competition and begin to create a relationship whereby your members feel understood and valued. Isn’t that the best way to guarantee long-term engagement?

Be consistent and accessible across all channels

Another important finding from the study is that most loyalty programs fail to offer cross-channel redemption services:

• 79% of loyalty programs use the mobile channel, and yet only 24% allow redemption through it
• Only 9% of loyalty programs offer point redemption across all channels
  If you want to increase your customers’ engagement and participation, you must make it as easy as possible for them to access what they need across every available channel and touchpoint, especially through mobile.