How NOT to run your loyalty program

Written by LS Retail | 02 September 2015

How NOT to run your loyalty program You've already learned about the 5 do’s for building a successful loyalty program. This week we look at the other face of the medal: what should you avoid to make sure your loyalty campaign hits the mark? Read on to find our 5 top don’ts:

Don’t only reward transactions

Loyalty does not need to be limited to purchases. Think about who your customers are and what motivates them, and try to engage them in different ways. Give points in exchange for actions that bring you benefits without costing your customers money: this can include writing reviews, interacting on social media or bringing in new customers. By rewarding customer referrals you simultaneously thank loyal users, gain new potential customers and get powerful word-of-mouth advertising for your brand.

Don’t make it too hard to get a reward

Set up a system of rewards which are enticing, but at the same time redeemable within a reasonable time frame. The whole point of setting up a loyalty program is to increase engagement and repeat business; no one will take part in your loyalty program if it is too complex, time-consuming, or if the rewards are not worth the effort. Marriott Rewards, the hotel chain’s loyalty club, was recently ranked top hotel program in the USA because it offers “relatively easy ways to earn free hotel nights and other benefits.” At the other end of the spectrum Beauty Insider, cosmetics chain Sephora’s loyalty program, is considered an example of how not to organize a loyalty scheme. The program requires customers to spend 100$ before they can redeem a reward – and even then, the gift is a measly sample-sized beauty product, the kind of item other cosmetic stores give away with every purchase. If you want to make customers loyal, be a Marriott, don’t be a Sephora.

Don’t limit the rewards to discounts and vouchers

Your program’s rewards don’t have to be discounts, vouchers or free items. Think creatively: what kind of non-monetary rewards would your customers value? Digital benefits (for example access to extra information on your website), early access to products, invitations to special events such as product launches? Many successful companies treat their loyalty campaigns as an integral part of the brand, and use it to offer better customer experience, eliminating the customer pain points. This includes, but is not limited to:
  • Giving eligible members extended return policies (Best Buy, the American consumer electronics retailer, offers this perk to its most loyal customers)
  • Granting preferential treatment (some airlines offer priority seats and boarding to frequent travelers)
  • Offering lower thresholds for free shipping (Prime, online giant Amazon’s loyalty program, offers this extra to club members)

Don’t forget to stay in touch

Last week we suggested you monitor your customers’ shopping history. Use the Intel to personalize offers and communications, including tailored offers and deals, reminders regarding discounts that might be expiring and updates on membership status. If you are not able to appropriately capture and analyze customers spending data and habits, do not spam your club members with irrelevant offers: stick, rather, to to-the-point messages about membership details and general sales and events.

Don’t be afraid of making changes to the program

Consider your program as a work in progress, and be ready to change its structure and rewards as you go along. The imperative is that the program stays profitable, and that it brings benefits to you as well as the club members. Keep track of your customers’ changing needs and tastes, and routinely adjust your program to keep your loyal customers happy and engaged.   Ready to make your loyalty program a success? Follow our advice and build a loyalty club that is beneficial to both you and your customers. If you still need help, drop us a line – we are expert in growing loyalty and helping companies reach their full potential.   [hubspot id=1]