There's a reason why customers ignore or leave your loyalty programme

14 May 2017

Many organisations' customer loyalty programmes are stagnant or losing members. The vast majority of consumers leave because loyalty points are difficult to earn.

Customer loyalty programmes are crucial to many companies' success, but they can be difficult to build.

Most customer loyalty programmes are in need of a shake up.

With consumers gravitating towards whichever store has the lowest price point, instead of displaying true brand loyalty, many organisations are struggling to prove their programme holds value in lieu of the potential savings available elsewhere.

No value, no loyalty

It's not as if consumers have entirely shunned the idea of customer loyalty programmes altogether. Roughly 71 per cent of Australians over the age of 14 belong to at least one brand's scheme, according to Roy Morgan Research. The most popular was Woolworth's, which had an incredibly high conversion rate of around 78 per cent of its customers becoming members.

But just because people are joining doesn't necessarily mean the company is receiving a return on its investment for how much time and effort it put into creating the programme, Norman Morris, industry communications director for Roy Morgan Research told the Sydney Morning Herald.

"A large membership is obviously important for a store's customer loyalty programme, but if members are inactive and don't actually shop at the store in question, then it can't really be considered successful," Morris said.

There are a number of factors that could be behind the reason consumers aren't engaging with a programme, with lack of valuable rewards being one that stands out. Perhaps in understanding why customers eventually opt out, organisations can better understand where their scheme is lacking.

"Customers will opt out if loyalty points are hard to come by."

Evaluate and repair

A vast majority of people who leave customer loyalty programmes do so because they feel as though they aren't earning points or rewards at a speed commensurate with their spending habits, according to a study by The Loyalty Point. Remember: the scheme is created to provide value to loyal consumers. If it's structured in an obvious bid to get them to spend more without proper compensation, it won't provide a return on investment for the business.

"Alternative benefits are becoming more popular than coupons."

Some organisations are also starting to realise that experiential benefits have more of an impact on loyalty than traditional rewards like coupons or discounts, Loyalty360 reported. These perks come in the form of travel discounts, concert tickets and entertainment like movies or music. The key is providing variety in the form of a tiered system. This gives your members the feeling they have control over their progression and what they earn. But, it's just as important to maintain continuity with these benefits. Another reason consumers opt out of a programme is because the rewards were changed, according to The Loyalty Point.

With all of this in mind, it's clear where customer loyalty programmes are trending. By implementing a point-based system, organisations can gamify the shopping experience. It's important to actively monitor the speed with which these marks are earned to find an optimal rate that works for the business and the consumer.

By using this type of scheme, companies can then introduce tiered benefits. Control plays a large role in this aspect, as people won't want to be told what they're earning. Consider deploying a digital platform that allows for easy access. If shoppers are able to see what they can earn, they'll likely be more apt to develop brand loyalty.

Building a comprehensive customer loyalty programme can be challenging, which is why it may be prudent to consult with a third-party service that specialises in the area. These schemes can provide immense value to a business, as it's cheaper to retain consumers than find new ones, but only if they're properly structured.

Interested in revamping your organisation's customer loyalty programme? Contact a Power2Motivate representative today.

 

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