The efficacy of loyalty programs is one of those topics that comes up for debate a lot. I recently came across a slide show on CMO.com crafted by Zack Loith, Head of Loyalty Strategy at 500 Friends titled “The 10 Most Common Mistakes of Loyalty Marketing”, prompting me to write this article. 500 Friends is a cloud-based loyalty solutions provider, recently acquired by Merkle, the largest privately-held marketing agency in the U.S..
One of the ways you can be sure to make your loyalty program more successful is to first understand where they often can go wrong. Let’s go through Zack’s list and add a few insights that should help you in your own planning.
Mistake #1 says that “Deploying a one-size-fits-all program” can lead to disaster.
- We agree that every single consumer is unique. Each of us responds differently to ads and promotions, as well as to loyalty programs in general. Personalisation is key in 2015 and should be made a priority. Marketers need to stop talking about personalization and start executing better in this area.
Mistake #2: “Setting reward levels without talking to customers”.
- Customer feedback can strengthen the process of creating rewards that are relevant to consumers. Let’s face it – rewards are one of two critical touchpoints for a loyalty program. You’ve got to get it right at enrollment and the rewards have to be compelling enough to keep members engaged. If you structure rewards based on customer feedback, they should respond as they identify with the value of the rewards available.
Mistake # 3: “Celebrating and encouraging use of rewards”.
- Many marketers continue to rely on breakage (the value of rewards earned that are never redeemed) as a positive factor in the grand scheme of their loyalty program. This isn’t necessarily true because you want members to be active, loyal and engaged with the program. According to Kristine Jacobs, 500 Friends VP of Customer Success, “If customers aren’t receiving the benefit of that investment, you’re less likely to see a return on it…”
Mistake #4: “Jumping in without a clear, long term strategy”.
- The time to decide how you want your loyalty program to complement your brand and support the customer experience is before you launch. To quote Stephen Covey, “begin with the end in mind” and you’ll find success.
Mistake #5: “Setting a reward expiration period that is too long or none at all”.
- There are many different views on reward expiration and lots of options to choose from when setting reward expiration policies. Your choices will have significant financial impact over the long term and should be carefully considered. Whatever you decide, be sure to clearly communicate the rules of the road with members to keep everybody informed and satisfaction levels high. No-one likes surprises.
Mistake #6: “Bombarding loyalty program customers with irrelevant offers,”
- Said to be a surefire way to steer customers away from your program, I refer you to point #1 above. Far too many brands send out communications that are titled as “just for you” when the content denies the promise. Offers that are truly relevant to your customers will channel positive feelings and can increase everything from email open rates, engagement and stimulate incremental store visits and spending.
Mistake #7: “Failing to deliver seamless mobile loyalty”.
- Let’s face it, if you haven’t already taken the time to create a mobile loyalty app to serve as a companion for your loyalty program, you’re behind the times. You need to communicate via mobile to engage customers, especially Millennials, who usually have their eyes glued to a mobile device.
Mistake #8: “Offering rewards that don’t measure up to other discounts”.
- Kurt Jetta, CEO of TABS Group, was quoted in the article saying “If a shopper gets 15 percent off just for entering her email address into your splash screen, the benefits she receives through your loyalty program had better be more attractive than that.” Taking a holistic view of customer incentives will help to fit your loyalty offers into the sweet spot it is meant to fill. Make sure rewards earned from purchases are worthwhile.
The final two “mistakes” are, in my opinion, the most important factors to remember when fine-tuning your program strategy.
Mistake #9: “Not measuring the impact of your program”.
- Develop a rigorous method to evaluate your loyalty program, and measure its impact on the business as a whole. Using data collected from member activity, loyalty marketers can determine where opportunities exist and improvements can be made.
Mistake #10: “Thinking you are done when your program goes live”.
- This is the most important mistake NOT to make, however, it is often overlooked. A program launch is equivalent to the start of a new relationship with the customer. While marketers talk about the importance of customer engagement, they need to remain engaged themselves with the program. Continuing to innovate and deliver new and exciting rewards, while measuring for success will help you meet your objectives
This list of 10 common mistakes is a great start, but there are other risky areas to consider if you don’t commit to consistently manage for improvement.
Among them are the need to manage your own internal resources to optimize for success. Coordinating and serving the needs of Marketing, IT, Finance and Operations is a big responsibility, while keeping your core team in the loop with important information, enabling team members to work together more efficiently.
Remembering that your launch date signals the beginning of the “real” work will help to maintain focus. Good luck!