Five Mistakes That Could Cripple Your Loyalty Program

Loyalty programs are all about connecting with your customers and creating a great experience for them whenever they interact with your brand. However, there are mistakes that brands make that can limit the success of a loyalty program and end up hindering the customer experience from the start. The biggest mistake that brands make is failing to adapt their programs to keep up with modern customer engagement trends. Those that don’t meet the needs of their customers will likely fall behind the competition.

Here are the five mistakes that could cripple your loyalty program:

1. Treating all your customers the same. To create a bond between the brand and its customers and maximize the impact marketers ave on revenue creation, market segmentation is essential. Within any customer base, there are segments of people with shared interests and motivational factors. When marketers develop insights into their customer base that reveal common motivators, the result is a powerful, profitable marketing strategy.

By identifying your market segments, marketing messages, offers, and message cadence can be tailored to each segment based on their common needs and behavioral patterns. The result is greater audience reach, more revenue, and higher profitability.

2. Putting all your mobile eggs in the app basket. The average smartphone user has around twenty-seven apps on their phone, but studies show that most users spend 80% of their smartphone usage on just five apps. That leaves only 20% of their usage time for apps outside of those five, meaning your app is competing with over twenty apps for the user’s attention.

The good news, a mobile strategy goes far beyond just your mobile app. By utilizing a full mobile strategy your brand can get to the forefront of your customers’ minds. Beyond a mobile app, you can use other elements of the mobile platform such as responsive web pages and emails, social media, SMS messages, and many other aspects of a mobile strategy outside of just an app.

3. Keeping your engagement ecosystem in a fragmented state. There are several different channels in which customers can engage with a brand and a brand can engage with them. There may be an online ordering channel, a fuel savings channel, mobile payment channel, and a loyalty channel. These are different sales channels or mechanisms that consist of a customer engagement ecosystem. They all need to be connected and centralized around a brands customer engagement strategy.

If these channels are not all integrated into one ecosystem there could be big problems such as longer wait times and misidentification of customers. A non-integrated ecosystem can also cost you with your customers. If you are unable to put these different channels together it can lead to an inability to maximize the value of all your customer data at each touch point which can cause you to send irrelevant offers to customers and spur loss of engagement.

4. Failing to listen to your customers. Everyone knows that customer feedback is very important to keeping up with customer needs and making sure that they are happy with your brand. If customers know that you are listening to them and acting to help create a better experience, then they will be more attracted to your brand. You only have a small window of opportunity to earn their loyalty. You have their attention and customers are speaking to you so make sure that you take the time out to listen. If a customer does not feel that their voice is heard they will not stick around and continue with your brand.

5. Giving away too much in rewards. You want your customers to feel that they are getting a reward worth their loyalty but you also want to make sure you are not doing damage to your bottom line. So how do you go about finding that balance?

You should strive for your core program to give back rewards worth roughly $4 to $5 in retail value for every $100 of in-store spending. For gas, margins are much tighter and you need to give less. If you are running a points-based program, it is typical to give customers the same number of points for buying two gallons of gas as you would for spending $1 in store.

When it comes to redemption, be careful with how open discounts can be applied. If customers get $5 off anything and use it for fuel, then you are potentially giving up a lot of margins relative to that same reward being used in store.

I discussed these mistakes in a recent webinar and provided an in-depth analysis for each of these topics. Watch the webinar on-demand and you will walk away with insights into how to avoid these common mistakes in your own loyalty program.