Monday, March 13, 2017

6 Reasons Why Most Loyalty Programs Fail

Many B2C companies begin a loyalty program with the right intentions. The competition for loyalty members has never been stiffer, and avoiding program fatigue can become an improbable task if you don’t plan in advance. 

By the time you discover your program is going south, not much can be done to salvage it. In your program post-mortem, you will need to analyze what went wrong, and the valuable lessons learned. Here are six reasons why your loyalty program will fail.

1). Undefined goals
How will you determine the success of your program? Start by defining your goals to achieve a set target, like having a 25% increase in new members by the end of the year. Once you have your goals on paper, track and compare your program’s performance over a specific timeline. Many entrepreneurs overlook the need to research the target market. Don’t be one of them.

Study your shoppers' shopping behavior and the actions that can trigger a reaction for them to receive a reward. Such Intel will increase engagement with your customers making your rewards more effective.

2). Choice of vendor
The actual loyalty tool can determine the success or failure of your program. Various software’s can run on a terminal, computer, tablet or smartphone. Whether integrated into your Point Of Sale, Property Management Program or Document Management Software, choosing a poor tool or a vendor with poor involvement will increase your program’s failure probability. A poor loyalty tool limits available customer touch-points both within, and outside the store.

3). Is your program complicated?
Simplicity is the key to a long-lasting loyalty program. Customers need to grasp your program instantly when they read your signage or hear about it from your staff. Make it easy for them to understand exactly why, and what they are signing up for. 

Airline frequent flyers is an example of hard to decipher loyalty programs. More so when it comes to redeeming miles, qualifying for elite miles or upgrading status. If you don’t communicate your value proposition clearly and consistently, your customers will lose interest. 

Ambiguous program rules and irrelevant or insufficient incentives are some of the reasons customers drop loyalty programs. Data from Edgell Knowledge Network found that 81% of members don’t know the benefits of the program they signed up for, nor how, and when they will receive rewards. You can incentivize your members to a certain point, but if the basics of your program are difficult to grasp, the ability to influence them will be lost.

4). Not getting your staff involved
Attractive signage around the store is a plus, but if your staff is not promoting your program, customers are less likely to learn about it. Your staff must be your brand ambassadors! 

No program will succeed long-term exclusively on autopilot if those operating it do not 'own' it. All levels of the organization from management, to the cashier, waitress or sales person must adopt it. Your employees need to encourage customers to participate and enroll new members constantly. They must promote the benefits of membership to your customers.

5). Not differentiating your brand
According to the 2015 colloquy loyalty census, U.S. consumers hold membership in 29 loyalty programs but are only active in 12 of them. Your customers are probably members of multiple loyalty programs as well. With so many to choose from, they will only remember to use the most rewarding of the lot. 

Customers will continue using a program they find to be of more value, fits their lifestyle, and is more rewarding than the competition. They also expect to get incentives and rewards from the program. If your business fails to deliver these expectations, you are at risk of losing your customers to your competitors.

6) Use the data collected
Keep track of every metric associated with your program from day one. Failing to carry out such analysis will cause you not to see emerging trends within the program. The data collected is valuable as it will give you a comprehensive picture of its effectiveness. 

Data collected can also assist your managers’ report the ROI of the program, and demonstrate clear financial rewards to your business. Regularly reviewing your data will help you flag fraudulent card swipes from staff. Such card swipes give your program a false impression of success. 

The intention of loyalty programs is not to give discounts or rewards, but to gain customer insights. A better analysis and deeper understanding of your program will help you build better relationships with your program members.

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