Statistics show that customers who are loyal to a brand will not only choose those products and services over a competitor’s time and time again, but they will also spend 67% more on products and services [1]. Hence you can see the importance of treating these loyal customers with respect and attention, reciprocating their loyalty.

If you’ve realized that customers aren’t interested in the rewards you’re offering or aren’t engaging with your loyalty program at all, then it’s time for a redesign or even just a refresh.

Common Issues in Customer Loyalty Programs

Highly successful loyalty programs cater to customers’ needs by fully and profoundly understanding their desires and anticipating them even before they do. Less successful programs often overlook this critical detail, either because of the lack of attention to detail, outdated technology or a simple overlook by the program design. There are many common issues with loyalty programs that fail to provide the things customers want and expect in this digital age, but here are some of the most common:

1. Overly Complex & Difficult to Understand 

• Complex Rewards Structures: Overly complicated reward systems can confuse and deter customers from participating.
• Lack of Customer Engagement: Some loyalty programs fail to engage customers effectively, leading to low participation and limited impact.
• Unclear Value Proposition: If customers don’t perceive value in a loyalty program, they’re less likely to participate or remain loyal.
• Communication Challenges: Poor communication can lead to customers missing out on rewards or not understanding how the program works.

2. Lacks That “Wow!” Factor 

• Failure to Adapt, Evolve & Innovate: Loyalty programs must evolve to meet changing customer expectations and market dynamics. Innovate to stay fresh and exciting to customers. Jump on trends and use technology to improve the customer experience.
• Lacks Personalization: Loyalty programs that don’t offer personalized rewards and experiences may not resonate with customers.
• Insufficient Data Utilization: Failing to leverage customer data to tailor rewards and communication can result in missed opportunities.

3. Not Easily Accessible or Convenient

• Outdated Technology: Use new technologies to improve the customer experience. Make using your rewards program feel easy and seamless – like second nature.  
• Limited Omni-Channel Integration: Failing to offer a seamless experience across online and offline channels can frustrate customers.
• Inconsistent Brand Experience: A lack of consistency in the brand experience across touchpoints can erode customer loyalty and drive customers away.
• Ignoring Customer Feedback: Failing to listen to and act on customer feedback can result in dissatisfaction.
• Ignoring Markets: Failing to be accessible to all customers of all socioeconomic levels, locations, abilities and more.

Addressing these issues requires a customer-centric approach, ongoing evaluation, and a willingness to adapt and improve the loyalty program based on customer feedback and data analysis.

Identifying the Problems: Lack of Awareness and Engagement

One of the most prevalent issues is educating customers that your loyalty program exists. According to Bond Brand Loyalty, 57% of customers don’t know a loyalty program exists [2]. That’s nearly sixty percent of customers that won’t engage with your loyalty program or become repeat customers.

Increasing program awareness is the foundation of success. Communications via multiple channels can help put this issue to the forefront. A brochure at checkout, posts on social media and notifications via email can improve customer familiarity with the program.

Even when consumers are aware, maintaining engagement can be a daunting task. Customers are increasingly demanding of the programs they participate in. Understanding what motivates and resonates with each customer segment is essential for retaining loyalty over time.

The Value Factor: Are Customers Seeing the Benefit?

Analyzing your customers often to see if they find value in your loyalty program is critical in ongoing management. If they don’t, your program won’t work in promoting loyalty and boosting customer engagement. The key is to provide substantial, obvious benefits that are easy to understand and redeem.

Almost 60% of loyalty program members want to get special offers that standard customers can’t have [3]. Whether that value is getting their hands on a product before the official release, off-stock availability, or something similar, the company must show dedication to its loyal customer base. This exemplifies the importance of truly understanding what your customers find valuable in your loyalty program.

Take MSC Cruises’ B2C casino loyalty program as an example. Casino players are a cruise line’s most valuable guests. Hence MSC Cruises’ desire to work with us to design their loyalty program to entice their casino players to cruise more, play more and spend more. The challenge was to develop a program from “scratch” and build a fully integrated recognition and reward capability that supported both onboard and offshore experiences. Over time, players delivered even greater value to onboard revenue.

Case Study: Sysco Foods

Sysco Foods was trying to increase sales for specific high-margin and preferred-vendor products. Our team developed a limited-time rewards program offering bonus points for ordering specified products. We limited exposure and cost by offering sponsorships to vendors and using sweepstakes-based rewards. Over 80% of customers registered, which was by far the most for any program ever offered. Incremental sales increased for all qualifying products.

Problem

Sysco needed a strong promotional program to increase sales, as well as showcase higher-margin products. Previous programs had limited success.

Solution

Our team designed a 16-week football-themed rewards program that offered rewards each week and a grand prize at the end of the program. The program also had four language versions.

Implementation

Developed a custom mobile application for restaurant owner customers using our points engine. Processed over 10M transactions per week and refreshed content every week.

Outcome

Over 100,000 customers joined the program. Proven incremental lift on sales for qualifying products. Sysco Foods deemed it the most successful program in company history [4].

What are some other strategies to help customers see the benefits of your loyalty programs? Try partnering with other brands to offer more value, save on costs and reach broader audiences. Co-branded promotions and exclusive access to new products or events can vastly enhance the program’s value. As an example, a fashion brand could partner with a celebrity for a limited-edition line that is exclusively for program members [5].

If your loyalty program is failing, it’s likely because the customers don’t understand the value you’re offering, give them something to talk about. Invest in creating a loyalty program with real value, make the benefits clear and worthwhile, and your customers should take notice.

Addressing the Needs: Tailoring Your Loyalty Program to Your Customer Demographic

Developing customer cohorts and demographics can improve your loyalty program’s strategy and rewards structures. Identifying cohorts requires data analysis and market research. A deep understanding of customer purchasing habits, preferences and feedback provides the data you need to provide rich value.

If you haven’t already, it’s time to invest in technology, market research and data analysis. Many technologies can make rewards feel personalized and exciting for your ideal market. Capturing customer feedback regularly will also help you deep dive into learning what your customers want from you – it may not always be discounts or points, it could be a simple fix in the user experience, your app or your communications with them could be improved.

Listening to your customers and showing them you’re taking their feedback seriously will go a long way. Tailoring rewards according to the cohorts you’ve created will greatly boost program engagement. Consistently, meaningful rewards drive engagement and higher loyalty [6].

Utilizing Technology: Enhancing Customer Experience Through Digital Solutions

Leveraging technology will significantly enhance your customer loyalty program. Innovations such as mobile apps, customer relationship management (CRM) systems, predictive analytics and much more can improve the customer experience and lead to deeper loyalty.

If you’ve walked into a bank recently, you may find you and the teller are the only people there. Banks are using technology quickly and effectively to enhance the customer experience through digital solutions. Customers can now access bank accounts directly from the app on their phones and computers. Deposit checks, transfer funds and open accounts without ever having to leave the comfort of home. With this technology advancement, banks do have to keep in mind the necessity for security and authentication. Citibank, Bank of America, and Wells Fargo do a great job of ensuring customers use two-factor authentication to prevent fraud.

Starbucks’ mobile app enables easy and seamless point redemption. Customers earn rewards with every purchase, adding value to their experience. Starbucks even uses artificial intelligence (AI) to recommend new drinks to their customers based on the products they currently enjoy, creating a consistent cycle of engagement and reward [7]. Customers are delightfully surprised when they try something new and love it, deepening their trust in the brand.

CRM systems can help track consumer behavior to get a clearer understanding of customer habits. These insights help customize offers and create more meaningful rewards.

Turning to digital solutions can result in a more user-friendly loyalty program. It becomes more enticing, ultimately driving customer loyalty upwards. Let’s not neglect, however, to blend this approach with more traditional strategies to provide every cohort with a loyalty experience all can enjoy.

Conclusion: Revamping Customer Loyalty Program for Success

To succeed, customer loyalty programs must accurately mirror customers’ evolving behaviors and expectations. Diligently collecting and analyzing customer data aids this.

Using data and technology, you can improve your loyalty program’s incentives. More personalized rewards significantly improve customer satisfaction and engagement. Customers should also be able to easily understand your program, see the value in the rewards and also understand how to redeem those rewards.  A user-friendly, digital solution enables effortless participation.

Although the initial investment could be expensive, these strategies will enrich the customer experience. Working with the right team is essential – whether you’re hiring a team or working with partners, it’s crucial to find the right people to improve your loyalty program. A successful loyalty program can lead to a business’s success over time.

References:

[1] Growing Loyalty Through Customer Engagement –  https://emarsys.com/learn/blog/what-is-customer-loyalty-and-why-is-it-important/

[2] The Battle for Love and Loyalty – https://www.bondbrandloyalty.com/newsroom/new-study-from-bond-reveals-one-third-of-members-are-unaware-they-are-part-of-loyalty-program

[3] Customer Loyalty Statistics – https://truelist.co/blog/customer-loyalty-statistics/

[4] Ascendant Loyalty Case Studies: SYSCO Foods –  https://ascendantloyalty.com/case-studies#9ba77049-c959-402e-a47f-d0851bf2814b

[5] Loyalty Programs: Are Your Customers Seeing the Benefit? –  https://www.marketingweek.com/customer-loyalty-benefits

[6] From Data to Action: How Marketers Can Leverage AI to Personalize Consumer Engagement. –  https://doi.org/10.1177/0022242919879934

[7] How Technology is Changing Customer Loyalty Programs – https://www.techfunnel.com/martech/technology-changing-customer-loyalty-programs/