Starting customer loyalty marketing programs has its own risk, even the best loyalty programs have risk. And no matter how small this risk is, it still holds a possibility of failure of the program in it. Business experts understand that as a business grows in size, it acquires more and more customers. However, there is also a possibility that it gets weaker and weaker in retaining its existing customers. And that is the most fundamental purpose of running an effective customer loyalty program to satisfy and retain as many customers as possible.
Mind you, the more loyal customers your brand has, the more profit it can make regularly. So, when you begin to have customers that make repeat purchases, the next thing is to devise a means of retaining them. However, this step requires some level of planning with a professional guide to see the program through. Furthermore, since the market is getting fiercer for competition each day, no business is willing to lose its consumers for any reason.
Therefore, the reward system enhances the business’s chances, winning consumers’ hearts through emotional connection. Based on this principle, some loyalty programs may fail while others may succeed. Customer loyalty marketing programs’ failure is about the expected results or producing the right amount of profit. This article discusses the possible reasons why some loyalty programs fail and helpful tips to correct those mistakes.
Why Loyalty Programs Fail
- Erroneous reward selections
One of the significant reasons why loyalty programs fail is due to some erroneous reward selections. That is, when there is a failure to relate the right rewards in alignment with what these customers want, the loyalty program may hit the rocks. Moreover, when the terms and conditions of the program do not align with the brand’s offerings and core values, it further complicates how the customers respond to it.
On the other hand, some brands introduce new practices to the loyalty programs that further complicates matters. However, instead of enhancing the effectiveness, it somewhat shields customers from joining the program and accesses the reward. Some retailers using the new, untested methods may find it challenging to convince shoppers to stay with your brand or the rewarding loyalty program. As a result, your loyalty program must be in such a way that it highlights this method’s gains to the consumer right away.
- Unattractive rewards
Customers that be attracted to a loyalty reward program must see very appealing rewards as the endpoint. Without these attractive rewards, customers may ignore your loyalty program because it may not make too much difference after all. Besides, rewards may also be tangible. Some of the other related factors that determine the success of customer loyalty programs include
- Unreliable deliverables and objectives
- Lack of encouragement towards business growth
- Low percentage incentives
- Emotional connection failure
It is also essential that loyal customers sense an emotional connection to your business brand. The connection goes beyond mere incentives and benefits to your target audience. It must come with a unique feeling of importance that promotes the bonding of customers and branding. When using giveaways, brands must accompany their offers with high value to elongate the offer’s lifespan. Without this emotional connection, the customers may not feel an inner need to choose your brand above others.
- Poor awareness
Therefore, if a brand’s awareness, a loyalty program may fail if the brand has not grown in popularity to some extent. How can you have consistent buyers who patronize your brand regularly if they are not first aware of the brand quality and value?
And before implementing the appropriate loyalty program tactics, create the right awareness alongside. Specific factors that may also influence the awareness level is the customers’ reference and business type. Business owners can also enhance awareness through advertising, social media posts, and other digital advertising methods.
- Poor communication management (CRM)
Customer loyalty programs can also fail because of a low communication management system despite having other well-structured parts. There is a unique way to communicate with potential, new and existing customers to create a perspective about your brand. By the way, delivering quality product and service is also a message on its own.
But often, merchants may not invest enough time to prove the worth of their business brand via effective communication. For instance, in a point-based loyalty program, while customers are gaining reward points, they should also know how to redeem their point rewards. Therefore, business owners can communicate reminders to these loyal customers via email, SMS, MMS, chats, and other means.
Helpful Tips for a Successful Loyalty Program
Amidst all the identifiable problems about why loyalty programs fail, below are some of the helpful tips to help run an effective loyalty program
- Focus on the data acquisition part to ensure your loyalty rewards go to the targeted customers. If possible, recheck and reset some of these offers regularly or set daily limits for daily rewards
- Use more tangible rewards than intangible ones since your customers quickly see the value of tangible rewards
- Clarify and simplify all loyalty program offers so that it requires not many words to communicate what is expected of them and the reward
- Organize your customer loyalty programs into tiers or levels that motivate the targeted customers to pursue the higher levels with greater rewards
- Train the members of staff on how to promote the brand and show the offers to the loyal buyers that patronize the brand loyalty program
- Send out regular reminders to your loyal customers about your offers, especially in a point-based or level-based system. This way, you can continue to raise awareness and encourage them to take the necessary actions. Reminders can come in the form of SMS, flash sales via the app, and marketing emails tailored to the buyer’s buying behaviour
- Experiment with the selected methods in terms of occasional promotional offers before launching a full-fledged loyalty program
Many customer loyalty programs fail because they first failed to address some of the points above. And it is not enough to only identify the reasons why they fail. It is also important to share tips on what to do to succeed. Hence the 7 tips of success followed the reasons why they fail. A company can also create a customized loyalty program that delivers high-quality deliverables to loyal customers while maintaining a long-lasting relationship with their loyal customers. It is more economical and practical to retain loyal customers than to seek new ones in the long run.