How to Fix the Problems with Loyalty Programs

Loyalty programs are a great way to retain customers and keep them coming back to the store time and time again. In fact, by increasing customer retention by just 5 percent, brands can increase profits by 25 to 95 percent, which is why loyalty programs are a go-to marketing source. But there is one major problem with today’s loyalty programs – there has been a 2 percent decline in overall active member rates which leads to slower growth and profits for brands.

What is causing this decline in active participation, and how can brands turn it around to fix this problem?

There are a couple of new insights that help shed a light on the cause of this decline and the tactics that can mitigate and even turn around loyalty programs so they are profitable and engaging to customers.

1. 43 percent of customers say that carrying a card is their number one frustration. Customers want to enroll and engage with loyalty programs, but they have a hard time carrying another card in their wallet around with them and always remembering to bring it on their shopping trips. The good thing is, this problem is easy to solve. Opening your program to different ways that customers can interact with it will help increase overall activity. With the rise of smartphones, brands can engage their customers on the platform they use the most. Offer an app, link a loyalty program to mobile payment, and utilize a simple phone number to appeal to the most customers. This way they will not need to carry a card with them always, they can use their phone to be active members of a program.
2. Only 24 percent of customers understand the loyalty programs they’re enrolled in. Some loyalty programs can be very challenging for customers to understand, with tiers, challenges, and multiple things going on at once it can be difficult for customers to know where they stand and how to get their next reward. It’s important to make sure all customers know what is expected of them in a loyalty program, how to get a reward, and how to redeem their rewards. There are is one rule that should apply to all loyalty programs no matter the brand – keep it simple. The easier it is for customers to understand and interact with the program the greater chance they will utilize the program.
3. 65 percent of customers try to redeem rewards only to find out they expired. There’s nothing worse than thinking you have a reward and going to the store to use it only to realize at the checkout that the reward has expired. In fact, 56 percent of customer change or abandon their purchases when they found out their reward expired. This leads to frustration for your customers and can turn them off from a program and cause them to no longer shop with that brand. Luckily, there is a simple fix to this problem – send out notifications of expiring rewards so that customers have time to act and use them before they become invalid. Sending out an email to customers who have rewards that are expiring helps spur activity and keeps them with your brand.

There are lots of other methods for fixing the problems with loyalty programs that I discussed in a recent webinar. Click here to watch the webinar on demand to gain insights into boosting active participation with your loyalty program today.