The 3 Core Customer Concerns on Loyalty Programs and How to Address Them

klyons Customer Loyalty, digital rewards programs, Loyalty Strategy

When you’re designing your loyalty program, chances are you’re considering a number of different factors. What types of rewards will you offer? How will you structure your points and points pricing tiers? Will you have member tiers? VIP programs? Chances for exclusive experiences?

As you’re considering how you’ll build out your program, your central focus should be on your consumer and how a loyalty program will positively affect them. Research shows that US consumers hold over 3.8 billion loyalty memberships in 2017. Clearly, consumers are open to joining a rewarding loyalty program. However, consumers also have their concerns and reservations about joining loyalty programs. Oftentimes loyalty programs fail or experience stagnant activity because these concerns either go unaddressed or completely unknown. That’s why it’s important to keep these top 3 consumer loyalty concerns in mind as you build out your own loyalty program.

1. Concern #1: This Program Has No Real Benefits or The Rewards Aren’t Relevant to Me

This is a tricky concern to combat. Your goal is to make your program rewarding and beneficial to all consumers. Simple discounted items are no longer a major appeal when the competition is numerous and fierce. You have to have other kinds of program benefits.

The problem is all consumers are different. Some want purely dollar rewards, other prefer to have products, and some want to have rewards which are super exclusive. The best way to address this concern is to offer different kinds of rewards which can appeal to consumers of all types. Another strategy is to offer program benefits other than just rewards. Exclusive content, such as tutorials or video interviews, or hosting events such as industry meet-ups are all good benefits you can add to your loyalty program to keep consumers engaged.

 

2. Concern #2: These Program Benefits Don’t Outweigh the Costs

 

This is a common complaint about loyalty programs — the time, effort, and money put into achieving points or member status is irrelevant in the face of tiny rewards. Take a look at the below example from poster Josh Hogan:

“For example, the gas station I frequent has a rewards program that offers ten points per gallon of gas, and you earn $2 off a purchase once you accumulate 2000 points. That’s 200 gallons of gas, meaning that at the current price of about $2.39/gal where I live, you spend $478 to save $2, which works out to a 0.4% overall savings. Not worth it.”

Customers quickly disengage from a loyalty program if there doesn’t appear to be a point in trying to gain points. Successful loyalty programs make earning points worthwhile to customers. Not only that, successful progBeing able to redeem for front row seats to your favorite artist’s concert is great.  But if it takes 200,000 points and you only earn 1 points for every 5 dollars you spend, then there’s little to no chance you’ll actually spend $1 million dollars for the opportunity.

You should ensure that rewards, while not easy to achieve, are achievable by program participants. Having tiered rewards can help and so can ensuring program members are able to track their points progress.

 

3. Concern #3: I’m Not A Frequent Shopper

Most individuals encounter this experience. The customer signs up for a rewards program for an additional discount on an item they only intend to purchase once. They purchase the item and are happy with the item. They don’t have any plans to purchase additional items so they ignore the post-purchase bombardment of messaging — emails on follow up offers, discounts on other items, flash sales, if-you-enjoyed-this-you’ll-also-like, etc.

Repeat customers are proven to spend more over the consumer lifetime and cost less to retain than new customers cost to acquire. But if customer behavior data indicates that customers don’t intend to make future purchases or if the items they’re purchasing are less likely to warrant multiple purchases — such as a toilet seat — then you shouldn’t overly focus on these consumers.

This is when it really pays to invest in setting established data collection and metrics for your loyalty program. You want to be able to narrow in on where your outreach efforts are most likely to succeed. Customers who frequently survey an e-commerce website or are active on your loyalty platform are customer relationships you should nurture. Messaging to new customers should be on introducing them to the program itself, outlining the benefits, the potential rewards, and the central ways to earn points. New customers should find your program easy and fun to use. So when they are ready to make their next purchase, you present as an attractive option.

However you design your loyalty program, take steps to ensure you’re keeping these major customer concerns in mind.