Avoiding common loyalty programme mistakes

Competition in retail has never been fiercer. With the growth in available channels and online retailers like Amazon selling everything from books to clothes to household cleaning products and even food, all retailers need to look at driving loyalty amongst their customers. However, when implementing a loyalty programme there are many things to consider before rolling it out to customers.

Loyalty schemes shouldn’t be implemented without knowing why one is needed, and what it’s trying to achieve. Just like any other planning that retailers undertake, the same diligence needs to be applied before a loyalty programme is put in place. Loyalty campaigns should focus on rewarding customer loyalty, not selling more products. The latter will come but can’t be the overall driver for a programme.

It’s complicated

The process of joining a loyalty programme or claiming rewards needs to be hassle-free. Add too many steps and people may not bother to claim what they’ve earned (or what the brand has gifted them). This is a great way to generate resentment in those who abandon the task. It sends the message that, while you may say you value the customer, you clearly don’t value their time.

Too much, too soon

If someone needs to fill out a comprehensive application form - detailing everything from their household income, to their level of education – and all they’ve done is walk into a new shop; they’re unlikely to sign-up to a loyalty card. Retailers need to approach it like dating. Information about customers grows over time. They wouldn’t give every detail away on a first date so don’t expect them to in an application form.

Remember that customers are willing to give retailers this data as long as they get something in return, but they need to build up to it. Our Future of Retail survey showed that almost half (45%) of UK consumers want personalised offers based on their personal data.

Making it all about the money

Loyalty schemes need to help create and grow an emotional connection to the brand. Thoughtful loyalty schemes that allow brands to show consumers how much they’re listening can be more effective than a simple “have 10% off this product.”

In our Future of Retail survey, 52% of UK consumers say advantages such as previews and pre-selling of products is important in making a loyalty programme attractive to them. In addition, 42% think it is important to be a part of the brand's product development. While monetary rewards are valued, customers want a connection.

Ignoring the data

Customers provide businesses with a rich source of data every time they shop, review, rate and recommend. There’s no need to rely on focus groups and surveys when customers are telling the business what they want, and what sort of things interest them as individuals. The data is there, businesses just need a way to collect and analyse it. They can then use this information to create rewards tailored to individual customers.

Making redemption difficult

Do customers know how to redeem their loyalty benefits? Do customers receive the offers in the way they want? Our research showed that many still want to receive coupons in the post, 39% compared to 31% want them over email to use digitally. Does the retailer add extra steps into the redemption process – for example, by making the customer pause during online check-out to visit the reward site, grab the codes they need, and go back to the main site?

Focusing on one type of customer

High-value customers are the hardest to please but once they are emotionally bound to a brand they are exceptionally loyal and are often advocates of the brand. They spend a lot of money with the business and need to be taken care of. They’re already high-spending means that there’s little room for growth, but this doesn’t mean they can be ignored. They need the personalised offers and rewards that they value and expect.

By creating rewards that target casual consumers - such as those who shop on special occasions, or when they are in the area – businesses can help create future high-value consumers. As appreciation for the brand increases, so does loyalty and patronage.

To avoid the common pitfalls of loyalty programmes, retailers need to understand what their customers want, and put them front and centre when planning the programme. Taking the time to understand customers prior to implementing a loyalty scheme will be more beneficial in the long run, to both the retailer and the customer.

This article is based on a white paper from Comarch on customer loyalty programmes, which is available to download.