Getting people to sign up for loyalty programs is no problem. People are looking for added value and ways to stretch their hard-earned dollars. But getting them to use the programs is another story.
Membership in U.S. loyalty rewards programs last year jumped 24% to 1.8 billion, from 1.3 billion two years prior, according to the 2009 Colloquy Loyalty Census.
And even though the average U.S. household belongs to 14.1 loyalty programs, they only actively participate in 6.2.
The take away? Marketers need to shift focus from growing membership to increasing the value of the programs.
Invest in communications to high-value, high-potential members. Use a mix of e-mail, the occasional direct mail piece and the Web site to communicate on a regular basis. Use self-reported preferences to make sure every channel members see is relevant, says Kelly Hlavinka, a partner at Colloquy.
Build upon the idea Implement targeted bonuses to high potential customers to sweeten the deal. United Airlines’ Elite Choice program offered gifts to premiere members if they met certain mileage thresholds. As part of the same promotion, premiere members could refer a friend and bestow premiere status on them, a good way to find other high-value members.
Explore partnerships Seek out non-competitive partners that can be looped into the program allowing members to earn points faster and in more ways. Convenience store Speedway added manufacturers to its Speedy Rewards program who sell products at its locations, including Coke and Krispy Kreme, allowing members to earn more points by purchasing a wider range of products, Hlavinka says.
Tough love Identify simple, well-communicated rules to keep members active in the program. Speedway manages the health of its program by notifying members that if they don’t fill up their gas tanks within 12 months they will be removed from the program.
Foster word of mouth advocacy Investing in incentives or bonuses for referral behavior can go a long way with members. Intercontinental Hotels ran a six-week test offering its top Priority Club members triple points for friends that booked a room night, Hlavinka says.
“Given how many companies are investing in these loyalty programs, it becomes very hard to defend that investment if you’ve got only a fraction of the members you’ve enrolled actively participating in the program. We’re responsible to show that we’re really engaging customers,” she says.
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