Ahhh. The loyalty program. The multiple keychain cards for supermarkets that your keys clang against. The loyalty credit cards that bump against your license in your wallet. The countless e-mails clogging your inbox that proclaim “You’re a valued customer! Special savings just for you!”
Like many customer retention programs of yore, the loyalty program used to really demonstrate value to loyal customers. Then seemingly every business hopped on board, making a unique idea not-so-unique. But loyalty programs certainly haven’t gone away—companies are still using them. So are loyalty programs still valuable, and if so, how can they help you add value to your loyal customers? Let’s explore the issue and add some “dos” and “don’ts” to the mix.
Seventy-five percent of Americans are “loyal” customers
A recent article cited statistics from a study released by ACI Worldwide that gave some insight on loyalty programs in the U.S. According to the data, 75% percent of Americans are members of at least one retail loyalty card program. Moreover:
- 62% join loyalty programs so they can get discounts on frequently-purchased items.
- 81% enrolled in programs they don’t completely understand.
- 85% haven’t received any additional correspondence from the company after they signed up.
- 44% have had a negative experience from a loyalty program.
- 27% stated that they received a loyalty program reward or promotion that made them feel like a valued customer.
Huh. What’s going on here? Americans sign up for loyalty programs, yet seem disenchanted with the “loyalty” service they receive. So should we throw the whole concept out the window?
Before we abandon the programs, we have to acknowledge that they can still be great tools for your loyal customers. To use, or not to use depends, of course, on how they’re administered. Like any tool meant to add value to loyal customers, if the program is handled sloppily, then it will lose its value. Here are some dos and don’ts to consider before you implement a loyalty program or overhaul your current one.
Loyalty Program Dos and Don’ts
Don’t increase prices on your other products/services but discount your “loyalty” items, simply to make the loyalty program more appealing. Your customers will catch on. Trust us.
Don’t make the program really confusing. If people have to read the fine-print just to understand how the program benefits them, it’s confusing. Make the value clear and simple to understand. Communicate that your customers are receiving perks simply because you value them as a loyal customer.
Don’t delude yourself into thinking that loyalty programs substitute for an engaging customer experience.
Do make the loyalty program personal. Use the information gained from your program (buying habits, for example) to tailor rewards that truly communicate value to loyal customers. Offer them something they’ll actually want to use.
Do work on your overall brand—take continuous steps to make your product something people want to be associated with. What are your ethics? How do your employees interact with customers? Where do you source your products? Customers pay attention, and they’ll be devoted to those companies that are aligning with their personal beliefs.
Do stand behind your loyalty program with great customer service. Understand your customer base, and show value to loyal customers accordingly.
We hope you see a pattern emerging here—loyalty programs can indeed work if they’re backed by a strategic, thoughtfully executed framework that delivers value your loyal customers are interested in. Additionally, if you are offering great customer service on top of a loyalty program, you’ll most likely start to obtain a truly devoted following.
