Improving Customer Loyalty

Loyalty programs have been around for a long time, and, when they are conceived and executed carefully, they can increase revenue, improve customer relations, provide useful metrics, and create better consumer engagement with a brand. However, recent studies on loyalty programs and their success with consumers have reported that the customer loyalty data is not always maximized, and that many loyalty programs themselves are seen as outdated, generic, and generally unmotivating to a lot of shoppers.

Can loyalty programs still work?

Customer data can provide businesses useful insights into their customers' preferences and behaviors, but only when the metrics are optimized to create an experience, discount, or reward that is seen as unique and valuable to the customers. The benefits to creating and managing a meaningful loyalty program include:

· Increased revenue

· Strengthened customer relationships

· Boosted retention rates

· Opportunities for customer feedback that can help guide changes and improvements

Many consumers have become wary of loyalty programs and the lack of true value they ultimately offer. Some of the common complaints people have about these programs highlight why many consumers remain reluctant to join a new loyalty program. Loyalty programs are more likely to fail when they are:

Complicated

Keeping the sign-up as simple and straightforward is key to getting someone—likely someone who is already very busy—to finish the process. While gaining data about personal preferences is important for creating customized and personal experiences, requiring too much personal information upfront is likely to turn customers off because it takes too much time and may be seen as too intrusive. Acquiring information about lifestyle and shopping choices may be an ongoing process and not something to inundate a new customer with right from the start.

Substandard

Small or paltry rewards make consumers feel unappreciated. A point system that accumulates slowly and takes seemingly forever to reach its goal frustrates customers, disincentivizing participation and offering weak competition to the other loyalty programs out there that promise more immediate benefits. Many consumers look for giveaways and useful bonuses, like free shipping, which offer immediate usage.

Impersonal

Programs whose rewards are tailored to the lifestyle, preferences, shopping patterns, and budget of the individual are more likely to have success than those whose rewards are seen as generic and impersonal. Tying additional rewards to referrals and customer surveys can appeal to more people, help expand a customer base, and can also provide avenues for gathering feedback and insight into distinct and unique things customers are looking for.

While some familiar loyalty programs rely on a point-based system for rewarding purchases, this model has been shown to have limitations. As more and more people shop from their phones, consume online content, and post personalized messages on social media platforms, many modern consumers have come to expect a personalized experience when engaging with a favorite brand. Therefore, more unique or personalized reward options are more likely to feel valuable to customers over a generic, one-size-fits-all type of reward. Loyalty programs that begin accumulating value from the moment of sign-up and that ask customers over time about personal preferences can help generate useful data for the company regarding its customers and what rewards are likely to seem valuable and meaningful to them. Since most consumers belong to more programs than they actually participate in, it is important to go beyond the initial point of sign-up and follow up with an incentive for the shopper to complete a purchase or redeem a reward. When the goal of a loyalty program is to actually affect changes in customer behavior—turning a repeat customer into a loyal one—it should encourage the consumer to go beyond a single reward redemption, while using the collected data to keep up with the patterns, preferences, and lifestyle changes that guide consumer choices.