Your loyalty program welcomes an influx of new members every month, and its attrition rate is low. So the program is obviously a success, right? Wrong. No matter how many members your program boasts, if too many of them are “passive participants,” you can’t call it a success.
Meanwhile, you may well be facing another common issue with loyalty programs: the turned-off customer. Consumers actively participate in only about half of the loyalty programs they join and leave unredeemed roughly one-third of the rewards they earn. What’s the problem?
Together, these “quiet” consumer loyalty marketing challenges can have a loud impact on your bottom line.
Passive Participants
Passive participants are those who enroll in the program and then seemingly disappear. Or perhaps they make a purchase or two after joining, but have no idea how close they are to a reward or what is required to earn one.
Ignoring passive participation in your loyalty program does nothing to help achieve the goals of your program. Worse, it can drain your resources and weaken your case when arguing the value of the program to executive skeptics.
So how can you encourage more participation in this sedentary group? Consider these strategies, which helped one of our clients net a positive ROI, as well as a marked improvement in member engagement:
1. Keep it simple.
Reduce the fine print and consider changing from a point-based to a dollar-based structure to increase program understanding. If the rewards structure appears confusing or time-consuming, customers are less likely to participate.
2. Give them stronger incentives.
Add new, more engaging benefits that resonate with customers. Test adding a tier for the top five percent of members, to provide additional rewards to best customers.
3. Stay in touch.
Enhance member understanding with consistent, monthly email communications and reward status updates. Improve in-store signage and be sure employees are well trained to explain and promote the program face-to-face.
4. Consolidate.
Bring multi-tender and credit card programs under one overall structure.
Alienated Customers
Now for another loyalty silent killer: the alienated customer.
There’s a big gap between how many loyalty programs consumers join and how many they really use – often, over half. But the program looked so good when it was developed, no detail overlooked. Why aren’t they engaging?
The problem, in many cases, is a loyalty program so complicated that members have no idea what it takes to get rewarded. Here are four common issues of over-engineering to watch for in your programs.
Obscure points values: Make it clear how members earn points. If you offer different point values for different types of purchases, keep it simple. You should be able to state your base value proposition in a single sentence. If you can’t, chances are your customers can’t, either.
Too many tiers: Member tiers are among the most valuable tools in the loyalty toolbox. When well designed, they provide an incentive to increase spend and frequency. But if a member has to struggle to track their status or understand how to reach the next threshold, it’s unlikely that you’re creating aspirational momentum and driving shopping behavior.
Automatic redemption: Today’s consumers expect electronic or digital rewards for simple rebates or discounts, but beware of handing out “automatic” rewards at the time of purchase. Members should request a reward rather than having an associate automatically tack it onto the end of a transaction — when the customer has finished their purchase and you’re not driving additional sales.
Unappealing rewards: If members don’t know what rewards are available or don’t find them appealing, they won’t be motivated to do what it takes to earn those rewards. Don’t assume that you know what will be aspirational for your audience — do the research! Ask your best customers what will motivate them to save up rewards (and consolidate purchases).
Reaching passive and turned-off customers is a challenge most loyalty marketers face one time or another. And these customers aren’t raising their hands to let you know how they feel. That’s your job. No matter how well designed and smart a program looks, it won’t work unless it’s genuinely customer-centric.
Sandra Gudat is president and CEO of Customer Communications Group.
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