5 Costly Mistakes to Avoid in Creating Successful Loyalty Programs

by Bistriti Poddar |

To gain a competitive edge in a saturated marketplace, customer loyalty can make all the difference. While loyalty stems from a company’s consistent effort to meet and exceed customer expectations, a study by Rare Consulting reports 83% of customers said their brand loyalty is a result of trust. Customers that trust a company will come back and purchase again. Customer loyalty impacts every important business metric.

Loyal customers mean higher profits, increased lifetime value, and more repeat business. According to Marketing Metrics, the probability of selling to an existing customer is up to 14 times higher than the probability of selling to a new customer.

In 2022, there is a need for capabilities that allow a seamless omnichannel experience that will supersede tired propositions and experiences. The interest has also shifted toward tier-specific programs, hyper-relevant experiences where and when the customer wants them, experiential rewards, and gathering and leveraging zero- and first-party data. Emotional loyalty has also become a priority which means loyalty programs are now focusing more on establishing deeper connections with customers instead of following a rational transactional-based model.

Time has become a currency, so convenience and simplicity are vital—whether it’s making relevant suggestions and offers based on previous purchases, allowing loyalty members to easily access their benefits and status and redeem rewards on any platform, or offering an app that serves up offers and payment options everywhere they are.

Many companies have loyalty programs, but very few are optimized to quickly adapt to today’s fast pace of change, support marketplaces, or create personalized engagement with customers in real time. In order to have a winning combination, your loyalty program must offer an emotional connection as well as offer relevant, personalized rewards. More often than not, loyalty programs are just marketing programs that incentivize the customer to come back. The fact that 59% of customers who sign up for loyalty programs don’t use them to shop every week is vivid proof brands have work to do when it comes to increasing customer lifetime value. With that in mind, here are some costly blunders to avoid in your loyalty strategy:

Complicated enrollment process

Today’s customers value convenience and you have seconds to impress them, especially given that in most cases enrolling in a loyalty program is an impulse decision. If your enrollment process is too complicated, they’ll quickly lose interest and won’t join.

Most users will sign up through their mobile device, so a lengthy registration process quickly becomes too complicated. In fact, 70% of consumers fail to sign up for loyalty programs because the process is too cumbersome.

Understandably, you want to use your loyalty program to gather customer data, but asking for too much during initial signup can drive consumers away. It’s best to minimize your registration form and keep the enrollment process simple. This includes quickly and easily answering the question, ‘Why should I join?’, while reinforcing the key benefits. This is one of the most effective ways to grab attention. Ensure customers can easily understand and remember all the benefits. The good news is you’ll have plenty of other opportunities to gather additional customer data as you engage customers across their entire journey with you.

Lack of an omnichannel strategy

Customers today expect and want it all—full transparency, efficient service, personalized offers, a seamless journey across all their preferred platforms, and more. Shoppers want to move between channels at their convenience and brands must tailor the experience to individual customers if they want to build long-term profitable relationships. In order to break through the noise and clutter, brands need to deliver more personalized experiences and relevant messages and offers. This can happen if they have a consolidated view of the customer and sync that data across their tech stack as part of an omnichannel strategy. Fragmented efforts at omnichannel can destroy the value. Modern shoppers are constantly evaluating companies based on the seamlessness of their experience.

The retailer Target, for example, has a clear omnichannel strategy that predominantly focuses on optimizing ecommerce. When customers shop on Target’s website, they can choose home delivery for either same-day or two days at no extra cost. Alternatively, they can select in-store or curbside options.

Not effectively communicating your program

What’s the point of having a loyalty program if the customers aren’t aware of it? Lack of proper marketing is one of the main reasons loyalty programs fail. Keep in mind your business vision and customer preferences as you come up with promotional strategies. Well thought out promotions have the power to attract new members, change member behavior, engage existing and lapsed members, even influence program perception.

The most successful brands embed loyalty messaging in all marketing efforts. Advertising on social media, sending an email announcement, featuring key website pages, sending text messages with offers, adding it to your blog, and reaching customers through your own mobile or third-party apps are some effective ways to generate awareness. As a brand, you can also offer a sign up perk like bonus points or a discount.

Additionally, how about turning your brand advocates into brand ambassadors? 8 out of 10 online customers have said they trust recommendations from friends and family members more than any type of advertising, according to Nielsen. Incentivize your members to invite their friends and family to join your loyalty program. In addition to this, leverage your employees and make them your program ambassadors. Make a cheat sheet of program benefits and train your employees to respond to questions.

Not recognizing customers for their engagement and transactions

Most brands focus so heavily on increasing their ROI they forget the most important entity in creating this ROI, the customer. Customers love the added attention they get when brands extend a warm welcome to newly onboarded customers or a thank you after completing a purchase. Customers should be made to feel important at all times for their contributions toward the brands’ success and growth. Recognizing and rewarding customers for repeat purchases or reaching a milestone not only boosts customer retention but it also fosters word-of-mouth referrals to family and friends that can increase your web and store traffic in return.

Building a strong connection with customers increases customer loyalty. Brands have to focus on empathy toward their customers. Empathy is the capacity to understand what your customer is experiencing from within their frame of reference. By going the extra mile by understanding their shopping requirements, gathering valuable feedback, as well as constantly improving their shopping experience, you lay the foundation for creating strong bonds. Instantly gratifying your customers with a Free Shipping coupon, Free Sample, Badge, an upgraded tier, or just a “thank you” are all possible mechanisms that can be strategically applied when running a structured loyalty program.

Failing to analyze the program’s data

You most likely are tracking every metric that’s associated with your loyalty program. But are you gathering true insights? Having data is one thing and using it to its full potential is another. We all know loyalty programs are a great source of customer data but if you’re not taking advantage of the data you’re collecting, you might be missing out on opportunities to tailor your offerings and this can lead to attrition. Data tracking can help you identify emerging trends and gaps as well as help you assess the program’s success rate. It can also be used to segment customers into meaningful groups.

Data is valuable and can be used to fine-tune your program, optimize your marketing strategy and foster better relationships with your customers. Leveraging the data can help you gain insights into your customers’ preferences, their buying behavior and purchase history, what program considerations will drive additional positive behavior, and more. This can help you create a better, more personalized shopping experience for them, provide unique rewards, and also create a strong emotional connection.

Assess these key aspects of your program to make sure you avoid these costly mistakes and elevate your loyalty program to deliver rewarding customer experiences.

For more than 10 years, Annex Cloud has been the worldwide leader in technology and service solutions that transform customer loyalty experiences for organizations, extending valued customer engagement, and collecting valuable customer information for enabling data-led strategies. Powered by the comprehensive and scalable Loyalty Experience Platform™, Annex Cloud customers capture and use zero- and first-party data to seamlessly deliver hyper-personalized experiences across the entire customer journey.
Get in touch with us today, we can help you launch a new loyalty strategy or elevate your existing program.

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