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How can retailers make loyalty programs more effective?

Written by Tom Ryan

Photo: RetailWire

According to the 2017 COLLOQUY Loyalty Census Report, growth in memberships in customer loyalty programs slowed to 15 percent during the census period versus 26 percent in 2015. “The membership growth slowdown signals the U.S. loyalty market is maturing and retailers need to up their game on how to attract and retain members within their loyalty programs,” said Melissa Fruend, LoyaltyOne partner and COLLOQUY Census author, in a statement. The report offers four tips for ramping up loyalty efforts:
  1. Tone down transaction-based rewards. One of the big motivators of frequent loyalty program participation across all industries identified in the research, is “I love the brand, company, retailer or service.” Yet in most programs, rewards are based on transactions alone. Exploring category drivers and brand attributes can help position programs around emotional connections.
  2. Make the redemption itself an experience. With the big focus on driving issuance of points or miles, little is paid to redemption and rewards. Yet 57 percent left a program because it took too long to earn rewards, and 53 percent left because a program did not provide rewards they were interested in. Gamification and contests tied to rewards redemption can help loyalty programs “step up the game on engagement,” according to COLLOQUY.
  3. Align with the customer experience. Starbucks’ pre-pay option that addresses long lines was touted as an example of how companies can integrate loyalty into the customer experience. COLLOQUY writes, “Programs must go beyond an earn-and-burn scenario; they must solve problems, ease a customer pain point or answer an unmet need.”
  4. Increased personalization. With customer data also available from other sources within the customer journey and investments in customer relationship management (CRM), marketing to segments should aim higher. COLLOQUY writes, “Perhaps it’s time for loyalty programs to both evolve and focus (or refocus) on rewarding the best customers. Or companies could do both: Create short-term promotional sales by leveraging loyalty for everyone while also focusing targeted investment on the best customers.”

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