Loyalty programs are everywhere—but are they any good?

Companies have long sought to leverage loyalty programs to move the needle on customer loyalty. Coffee shops offer punch cards that reward customers with a free cup of java after their nth purchase. Airlines provide frequent flyer programs that lead to complimentary upgrades and access to exclusive airport lounges. For all, the end goal is the same: building and strengthening customer relationships while boosting bottom-line results.

But despite these efforts, our global research shows that customer satisfaction with loyalty programs is relatively low. Many programs are simply relegated to the back of customers’ wallets, never to be used again. How is a manager to know if his or her loyalty program is living up to its full potential?

Recognizing the 10 most common pitfalls of loyalty programs can help you find the answer—and pull your loyalty program back to the front of customers’ minds.

1.       Failing to deliver on ROI. Loyalty programs are expensive to setup and maintain. Is your company truly maximizing return on investment or are you missing out on up-selling and cross-selling opportunities?

2.       Poorly aligning with the brand promise. Your loyalty program is an extension of your brand. If the program diminishes the customer experience, it’s doing more harm than good.

3.       Not building deeper relationships with customers. People don’t want to feel like they’re just another transaction. Demonstrating that you truly value your customers’ business secures your brand in their hearts and minds.

4.       Treating all customers the same. Different customers have different needs, and your frequent customers are seeking different things than your occasional customers. A loyalty program should personalize benefits to each group for maximum impact.

5.       Lacking differentiation. Run-of-the-mill rewards limit your program’s ability to attract customers to your brand—and away from competitors.

6.       Missing out on mobile. The convenience of a mobile app that allows customers to earn and redeem points digitally often tops the effect of physical cards.

7.       Failing to evolve with time. A successful loyalty program stays tuned into customers’ ever-changing needs and re-evaluates offers frequently.

8.       Offering bland perks. Truly relevant rewards motivate customers to keep coming back for more.

9.       Being too difficult to use. Even the most attractive program falters if customers have to jump through hoops to earn and use points—their experience should be as easy as possible.

10.   Not listening to the customer. An open dialogue is crucial to addressing evolving customer needs and pain points. The loyalty program should enhance the customer experience.

 Successful loyalty programs can yield tremendous financial benefits for companies and transform their customers’ experience. We at Ipsos Loyalty are experts at advising organizations that are looking to optimize their loyalty program offer.

 To read more about our approach to measuring and managing Loyalty Programs, click here.

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