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LS Retail | 07 January 2022

How NOT to run your loyalty program

How NOT to run your loyalty program

You've already learned about the 5 do’s for building a successful loyalty program. Now 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 should not be restricted solely to purchases. Take the time to understand your customers and what motivates them, then find innovative ways to engage them. Consider rewarding actions that benefit your business without costing your customers money, such as writing reviews, interacting on social media, or bringing in new customers. By showing appreciation to loyal customers through referrals, you not only gain new potential customers but also generate powerful word-of-mouth advertising for your brand.

Don’t make it too hard to get a reward

Establish a reward system that is not only enticing, but also allows customers to redeem their rewards within a reasonable timeframe. The ultimate goal of implementing a loyalty program is to foster engagement and encourage repeat business. If the program is too complicated, time-consuming, or the rewards are not perceived as valuable, customers will be less likely to participate. Marriott Rewards, the renowned hotel chain’s loyalty club, has earned the top ranking in the United States due to its "relatively easy ways to earn free hotel nights and other benefits." On the other hand, Beauty Insider, the loyalty program of cosmetics chain Sephora, serves as a cautionary example of how not to structure a loyalty scheme. Sephora's program requires customers to spend $100 before they can redeem a reward, and even then, the reward is a small sample-sized beauty product that is typically given away for free with every purchase at other cosmetic stores. To cultivate customer loyalty, strive to emulate Marriott rather than 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

Utilize the valuable information you have about your customers to personalize your offers and communications. Tailor your promotions, deals, and reminders to suit their individual preferences and needs. Avoid bombarding your club members with irrelevant offers if you are unable to capture and analyze their spending habits. Instead, focus on sending concise and relevant messages about membership details, along with updates on upcoming sales and events.

Don’t be afraid of making changes to the program

View your program as a dynamic and evolving endeavor, always prepared to adapt its structure and rewards as you progress. The key is to ensure that the program remains profitable and delivers benefits to both you and your club members. Stay attuned to the evolving needs and preferences of your customers, and regularly fine-tune your program to keep your loyal customers delighted and engaged. 

Are you ready to tap into the full potential of your loyalty program? Embrace our expert guidance and build a loyalty club that not only benefits your business but also delights your valued customers. If you still need assistance along the way, don't hesitate to reach out - we specialize in cultivating loyalty and helping companies thrive.

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