Failure to Launch: Top 5 Mistakes that Cause Loyalty Programs to Fail
Customer loyalty is about understanding what consumers care about and giving them what they need
By BRANDON LOGSDON | Contributing Writer
In retail customer loyalty, “failure to launch” refers to a missed opportunity to capitalize on the inherent value of loyalty programs—a most powerful tool for driving customer engagement and business growth. Let’s discuss how you can avoid it.
Some loyalty programs incubate for so long that they are outdated by the time they launch. Retail operators and loyalty marketers can spend a year or more developing a program with all the bells and whistles only to discover it’s not what their customers want, or a competitor has beaten them to the punch. If your organization is in the process of developing a loyalty program, don’t fall into the “overdevelopment” trap.
It’s better to launch a small program sooner than later and start getting valuable customer feedback right away. This approach is similar to the Agile method in software development, which calls for the release of software updates frequently but in small increments. In the same vein, introduce your program now, then adjust the communications, offers, earning opportunities and functionality based on both customer feedback and performance data.
Top 5 mistakes to avoid
Another scenario is when a loyalty program succeeds upon introduction but fizzles out over time. You don’t want that predicament either. Here are five common reasons why a loyalty program fails. Avoid these mistakes at all costs.
#1 Your rewards don’t match what customers really want. Fuel savings remain the most valuable reward currency for loyalty program members, according to PDI’s recently released 2019 C-Store Shopper Report. The report showed that 55 percent of shoppers surveyed earn rewards they can redeem for gas savings.
Fuel has a universal appeal. The widely popular cents-per-gallon savings leverages that fact. Proven to influence consumer decisions, it allows members to dine out or buy things they normally purchase at different merchants while earning rewards that can be redeemed for fuel savings. If your program doesn’t offer fuel savings as a reward, you should start offering it now.
#2 You are not promoting continuously. Loyalty programs are as popular as ever, so you are facing tough competition. Promoting awareness of your program is paramount, according to the 2019 C-Store Shopper Report. It shows that 37 percent of shoppers didn’t join a loyalty program because they didn’t know a particular convenience store offered one, while 26 percent said they have never been asked to join a program. Maintaining a loyalty program takes time and costs money. Make sure to keep the level of consumer awareness high with new offers, timely promotions, and ongoing front-line associate training so you can earn back your investment in the program.
#3 Your loyalty program is too much of a hassle. Your program should be a perk, not an obstacle course that requires logging into a website, calculating points and filling out forms to redeem a reward that may not be all that desirable. Make your program as simple as possible. A mobile app can make tracking and redeeming rewards more convenient. Part of the huge success of the “instant point-of-sale redemption” approach lies in its convenience. Under this type of program, a member earns fuel savings, or discounts on convenience items inside the store, which can immediately be redeemed at the gas pump or the register inside.
#4 Your loyalty program treats everyone exactly the same way. While equal opportunity is a great virtue in the workplace and in society as a whole, it’s counterintuitive when it comes to customer loyalty. In a saturated market, you can differentiate your program by knowing each customer well, with a view toward personalizing your messaging and communications. Your messaging and promotional offers shouldn’t be one-size-fits-all.
Digital, mobile and social channels offer many opportunities to gather customer data that could inform future offers, communications and overall program direction. Data-driven insights can help you tailor interactions with individual members. Choose an integrated loyalty and customer marketing solution with the capability to segment your membership and to deliver personalized offers across channels.
#5 You are not making full use of customer data. Take a cue from the 2019 C-Store Shopper Report, which shows that a majority (72 percent) of c-stores collect customer data, but they don’t fully benefit from the information. Only 25 percent use the information they collect to identify new potential customers with similar qualities as their existing loyalty members. They are missing out on a valuable method for understanding customer behaviors. Again, it’s essential to use the right loyalty marketing technology with robust analytics and reporting capabilities to fully leverage the customer data you collect.
Evaluate and improve your program
Consumer behaviors evolve and so must your loyalty program. Being aware of common mistakes will help you view your program from a different angle and identify areas for improvement before it’s too late. Keep track of key performance indicators (KPI) to help in your evaluation, including membership growth and churn, redemption transactions, and the number of in-store and online visits.
In the end, customer loyalty is about understanding what consumers care about and giving them what they need. If your program can do that, you will earn their trust and confidence and keep them coming back over the long haul.
Brandon Logsdon, President and GM of Marketing Cloud Solutions for PDI Software, oversees the company’s loyalty division, in addition to its MarketLink and Data monetization services. PDI Marketing Cloud Solutions is a complete end-to-end solution that combines the secure and scalable PDI Marketing Cloud Platform with the industry knowledge and first-hand experience of the PDI Marketing Solutions Practice.
Prior to PDI, Brandon served as Excentus’ President and CEO and was the driving force behind the launch of one of the most successful national coalition marketing programs in the U.S., the Fuel Rewards® program, as well as robust loyalty solutions for the convenience retail and grocery industries. Brandon has also held positions at Bloomin Partners and JPMorgan Chase, among others. His experience and expertise uniquely qualify him to share his assessments of the state of loyalty and what he perceives to be the dominant trends for years to come.
To learn more about how PDI Marketing Cloud Solutions, visit the PDI Marketing Cloud Solutions website.