Businesses use loyalty schemes, free gifts and other perks to reward customers for their loyalty. However, these schemes often clash with the way consumer behaviour has evolved.
We’re not just driven by discounts. We want a satisfying retail experience and rewards that reflect who we are and what we love. We don’t want to be bogged down in cards and forms. We don’t want to be treated like generic customer number 867,390.
Sometimes it can be hard to understand why customers don’t sign up to loyalty programmes (or why those who have signed-up, don’t take advantage of the benefits and rewards they’ve earned).
Loyalty programmes should be designed with the customer’s interests and goals at heart. To achieve this, the business needs to get to know the customer and understand what they’re looking for in a programme designed to benefit them.
REWARDING, NOT INCENTIVISING
Many would say that a good loyalty programme acts as an incentive. After all, you’re likely to want to shop more frequently if you’re looking forward to the reward you’ll earn.
But great loyalty programmes aren’t only about encouraging people to spend. It’s easy to tell when a business doesn’t really care about rewarding its customers but just wants us to spend more.
For example, giving every customer a receipt that grants them a 10% discount on printer ink is clearly about selling more printer ink. It doesn’t do anything for the customer who doesn’t have a printer.
It’s obvious to customers when a reward or an offer isn’t about them, but about the business and what it needs. This can alienate, rather than incentivize, loyal customers.
Research conducted by Comarch and Kantar TNS found that 87% of UK consumers saw the quality and quantity of rewards that retailers offered as important. In total, 86% saw collecting points as important, while 85% placed a high value on offers and promotions.
Less tangible rewards, like being part of product development and getting exclusive early-access were less important to respondents. It’s clear that people place a high value on the rewards they’re offered, and that they expect retailers to offer something both material and relevant to the individual.
REDEMPTION IS TOO HARD
Great loyalty schemes don’t make it hard to redeem rewards. Think about it in terms of a journey to purchase. The harder it is to buy an item, and the more hoops people have to jump through, the less likely they are to make the purchase.
If rewards are too difficult to claim, and if there are too many steps involved or the redemption period is too short, the loyalty scheme is failing. People will start to think the business wants to make rewards hard to redeem.
They’ll start to see it as an incentive scheme, designed to make them spend more money while discouraging them from claiming the rewards they’re due. Making redemption difficult doesn’t just stop people from claiming rewards, it actively damages the relationship between the business and its customers.
THE BRAND DOESN’T KNOW WHAT WE WANT
The rewards we’re offered have to interest us personally, otherwise, there’s nothing rewarding about them. These days, businesses collect huge amounts of data about their customer’s purchasing and browsing habits. Some online stores even have access to our wish lists.
If you have enough data to recommend a customer’s next purchase, you have enough data to come up with a personalised reward.
If this data isn’t available, or if the business simply doesn’t use it to tailor loyalty rewards, the scheme can end up presenting an array of rewards that just don’t interest customers. And why would anyone be excited about receiving a gift that they don’t want?
THE SCHEME ISN’T FOR ME
Sometimes businesses can be so focused on rewarding and incentivising infrequent customers, that they neglect their high-spending counterparts. While a customer who spends thousands of pounds a year with your business may have a limited potential for growth, they’re also key contributors to the success of the business.
Offering a tiered reward scheme ensures that these high-value customers are rewarded in line with their spending, and not neglected.
If we see that the loyalty rewards on offer don’t reflect our interests, or aren’t worth a lot compared to what we spend with the business, there’s no desire to attain the reward.
The biggest block to customers using loyalty perks is a lack of understanding. It can be something as simple as the customer not being able to wade through the redemption process, but it could also be because the business just doesn’t take the time to understand its customers.
What are their goals? How can the business help them get there?
Loyalty is about developing a long-term relationship. Communication and understanding are crucial to success. If there’s a basic misunderstanding between the business and its customers, the loyalty programme may function, but it will fail to thrive in the long-term.
Author: Julian Bonnett, Business Development Director, Comarch