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 exploring how you’ll build out your program, your central focus should be on your consumer -- 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 experience stagnant activity or even fail because these concerns go unaddressed or worse -- 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.
Concern #1: This Program Has No Real Benefits Or The Rewards Aren't Relevant To Me
The first concern is a tricky one 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 your competition is numerous and fierce. You have to offer other types of program benefits.
The problem is all consumers are different. Some want purely dollar rewards, others prefer to have more 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 rewards. Exclusive content, such as tutorials or video interviews, or hosting events like industry meet-ups are all unique benefits you can implement into your loyalty program to keep consumers engaged.
Concern #2: These Program Benefits Aren't Worth 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 if there's no motivation for earning points. Successful loyalty programs offer rewards that are worth earning points to customers. In addition, successful programs make earning points possible for customers. Being able to redeem for front row seats to an artist’s concert is great. But if it costs 200,000 points and customers only earn 1 point for every 5 dollars they spend, then there’s little to no chance they'll actually spend $1 million dollars for the opportunity.
Make sure your redemption math makes sense and takes steps to adjust any out-of-touch rewards. You may not want your rewards to be easy to achieve, but they still need to be achievable.
Concern #3: I'm Not A Frequent Shopper
This is a common experience for consumers: They sign up for a rewards program to get an additional discount on a 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 be purchased multiple times — 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 focus on introducing them to the program itself, outlining the benefits, the potential rewards, and the central ways to earn points. It should stick in their ming that your program easy to use and beneficial. So when they are ready to make their next purchase, you present as an attractive option.
Staying Mindful Of Customer Concerns
The same way every industry experiences different challenges, your customers will experience different concerns. The key is to stay aware and mindful of major customer concerns, not only during the initial program design, but after program launch.