It's a fact that loyalty programs help companies from every industry retain and delight their loyal customers. 

Yet a persistent problem within loyalty programs is low levels of active customer participation. And there’s a simple reason why — some loyalty programs just suck at customer engagement.

These kinds of programs operate by a “set it and forget it” mentality. And that simply won’t do in a digital age.

The main issue is most loyalty programs are geared towards rewarding transactional interactions, and only transactional interactions. The reasoning is understandable: customers make purchases, earn the points for the purchases, and eventually redeem the points. Simple in theory and simple to execute.

Where programs fall short is when they provide great incentives to join up…and then little-to-no incentives to stay.

Loyalty programs fail their customers when they cease engaging with the customer beyond the check-out cart. In reality, they should be engaging with the customer at multiple opportunities.

Why Are Programs Overly Focused On Transaction-Only Rewards?

Well, it is the easiest process to follow.

It takes a minimal amount of technology to log a customer’s purchases. Data capture for types of items purchased, purchase frequency, and average spend enables companies to easily reward the customer for transactions.

Yet just because a customer purchased an item in the past doesn’t always mean they’ll repurchase it in the future. It doesn't even mean they’ll purchase similar items. They could end up not liking the item or only needing it infrequently.  Or circumstances change and they don't need the item ever again.

When your program is structured so customers only receive rewards for purchases, then their only opportunity to engage with your program is when they make a purchase. And that could be very infrequent.

This is the downside of limiting rewards solely to purchase behaviors. When buying is low, so is the effectiveness of your rewards.

Building Engagement = A Better Customer Experience

More than ever it is the overall customer experience that builds true loyalty. Your loyalty program should invest in rewarding engagement-based actions.

Encouraging customers to engage with your brand in multiple ways (not just during the check-out process) creates a larger, more improved brand experience for your customers. In one study over 54% of customers said they’d purchase from a company where they had an excellent customer experience - which is separate from good customer service.

Most importantly, rewarding customers for non-transactional behaviors — engaging with your brand’s social media accounts, signing up for news alerts, or participating in a brand-sponsored event — tells customers you’re invested in them as people. Not just purchases.

The brand providing excellent products at great prices and a smooth shopping process with a personalized touch stands out among competitors.

When the customer also receives valuable rewards for those purchases, it only enhances the already-positive engagement.

Get To Know Your Customers

If you focus only on analyzing the past purchases, you miss understanding your customer as a whole. You restrict yourself to a one-dimensional view of the customer by only using historical data.

Current customer behavior provides more opportunities. Is your customer browsing certain reward categories repeatedly? Are they visiting specific parts of your site more than others? Have they bookmarked specific items but failed to purchase or redeem for those items? You can use this information to develop targeted buy/redeem offers.

Customer feedback is another great engagement opportunity for your brand. Reward your customers for taking surveys, reviewing products or locations, and interacting on social media. This also provides you with valuable insight into your customers’ preferences.

The time and effort required to break down this level of customer detail is exhausting. Yet it's necessary to build a seamless customer experience; not only within your loyalty program but during interactions with your brand as a whole. By devoting resources to learning about your customers’ specific interests, you can cash in on vital opportunities for more personalized engagements.

More Than Just A Number

Engagement-focused loyalty programs do not ignore transactions. They understand by only rewarding transactions, they only encourage future transactions and nothing else.  Encouraging customer-brand engagement demonstrates how you value your customers and appreciate their loyalty to you.  

Now go re-engage those customers!

Or if you need some assistance, we're always happy to help.

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