Successful loyalty programs boost retention rates — and an increase of just 5% in customer retention can grow profits by up to 95%. But is your current rewards program delivering?
For many businesses, the standard points-for-discount model is not enough to foster true, emotional loyalty among modern consumers. This can lead to some rather unfortunate stats, like the fact that over half of “loyal” members are inactive. Or that 72% of transaction-based loyalty programs fail within the first two years.
Chances are, your business could be doing more to win customers’ hearts – and their valuable, lasting loyalty. Here are three signs it’s time to upgrade your existing program, to create more value for your customers and your business.
1. You don’t know who your customers are – and can’t easily access the data to find out
In recent years, big data has been touted as the solution to many of marketing’s troubles. But getting the right data into the right place, where it can be applied effectively, can be an ongoing struggle. A study conducted by Forrester found that the average marketing team had 11 siloed data sources, and only 22% had a single database for all their customer information.
But with data spread across different systems and teams, it can be difficult to get a clear picture of who your customers are – their purchasing habits, interests and motivations. And this information can be essential to formulating an effective marketing and loyalty strategy.
Similarly, many marketing teams have to request the data segments they need from another department, which our customers report can sometimes take weeks. And often, the resulting target groups are too small to be practical – meaning segmentation criteria must be tweaked and the entire process started again.
This makes it difficult to deliver relevant content in-the-moment, or make critical, data-driven decisions about your strategy, simply because you don’t really know who your customers are. On the other hand, businesses with easy access to their customer data can react quickly to changes in customers’ attitudes or behaviors, adapt their strategy on-the-fly, and engage customers with the right content in real-time.
This flexible, data-driven approach is essential for creating the experiences modern customers desire – the types of interactions that win their hearts and keep them loyal to your business over the competition.
So, if your business struggles to collect or compile data on your customers beyond the basics, and apply this information both tactically and strategically, it’s time to upgrade your loyalty program.
2. Your loyalty members aren’t actively engaging with the program
There can be a temptation to think that fewer members redeeming their points is a good thing – at least you’re not paying out for the rewards, right? But a loyalty program that isn’t driving engagement and redemptions isn’t driving true loyalty either.
To maintain competitive advantage, brands must create an exceptional experience every time a customer interacts, on any channel. And part of delivering this experience is ensuring that every interaction is relevant, personalized and simple – this makes customers feel valued and creates a positive emotional connection with the brand.
A lack of participation with your program is a sign of a sub-par customer experience – and poor experiences won’t build lasting loyalty.
What exactly does this poor experience look like? It could be that earning or redeeming points is too complicated. Make an honest assessment of your current scheme – does your cash-to-points formula have members consulting their calculators? Are they digging out their dictionaries trying to understand the terms and conditions for redeeming a reward?
If so, there’s a likelihood your members will start to disengage, not just from your scheme but potentially from your brand as well. 89% of customers said a loyalty program that was quick and simple to interact with would influence where they chose to shop, while 30% found loyalty programs too confusing. (Ecrebo)
Other examples of poor program experiences include rewards that are too difficult to attain or are simply irrelevant. In fact, loyalty consultancy Colloquy found that these were the top two reasons customers disengaged from a program.
If any of this sounds familiar – complicated program mechanics, out-of-reach or irrelevant rewards – consider upgrading your program.
3. You’re not able to target rewards to relevant members or personalize offers based on data
We touched on personalization in the point above, but it’s important enough to merit a little more attention. According to a recent report, 74% of customers said they’d engage more with a program that offered tailored rewards.
Despite this, most customers feel that the loyalty programs they engage with are not doing enough to be relevant. For many marketers, the key obstacle here is data. This goes back to our first point: without the ability to access your customer data in-the-moment – the ability to know who your customers are while they’re interacting with you – it’s almost impossible to tailor your loyalty marketing effectively.
But even with access to the right data, delivering the level of personalization customers expect requires the right strategy and the right tools.
Great personalization doesn’t just happen – it starts with a strategy. You’ll first need to know how you plan to tailor your program, so you can determine the data you’ll need to collect. It’s difficult to personalize based on age group if you don’t ask members how old they are.
Similarly, you’ll need to have something to personalize – using a member’s name isn’t enough. In other words, if only generic rewards are available (e.g. “10% off your next purchase” or a £5 voucher) there’s not much to personalize in the first place. Rewards based around certain products, services or experiences not only give you the opportunity to personalize based on members’ tastes, interests and preferences, they also offer more value than generic discounts.
So let’s say you’ve got the right data and a great selection of rewards. Does your current loyalty software have the ability to apply this data and make decisions about which content to present, in real-time? This is the essential final step to creating a tailored loyalty program. It’s no use having all the right ingredients for personalization if you haven’t got the tools to put them to good use.
To that end, your loyalty platform will need to be able to access customer data, make intelligent decisions based on this information and then take action – on any channel the customer desires.
In fact, the cornerstone of any of update to your loyalty program is the technology platform behind. The constraints or capabilities of your software will significantly impact whether you can put these strategies into practice.
Our Horizon Loyalty Hub is the perfect fit for businesses looking to use their data more effectively to create exceptional, personalised loyalty experiences in-the-moment. A hybrid CRM, marketing automation and loyalty platform, Horizon takes marketers from data to insight, and insight to action, in record time. Find out more →