How to Fix the Problems with Loyalty Programs

Loyalty programs are a great way to retain customers and keep them coming back to your business time and time again. In fact, by increasing customer retention by only 5%, your brand can increase profits by 25 to 95%, which is why effective loyalty marketing strategy is an ever-more-important part of your overall marketing plan.

But there is one major problem with today’s loyalty programs – there has been a two percent decline in overall active member rates which leads to slower growth and profits for brands. What's 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% of customers say that physical loyalty card programs are 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. 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 a loyalty app, link your loyalty program to mobile payments, and utilize a simple phone number to appeal to the most customers. This way they will not need to carry a card with them; they can use their phone to be active members of a program.
2. Only 24% of customers understand the loyalty programs they’re enrolled in. Some brands' loyalty program designs are challenging for guests to understand. With tiers, challenges, and multiple things going on at once, it's difficult for customers to assess their progress and know 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 guests to understand and interact with your program the greater chance they will utilize the program.
3. 65% 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 a business to use it only to realize at the checkout that the reward has expired. In fact, 56% 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 your brand. Luckily, there's 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 we 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.