A good loyalty program will help the customer to decide to do business with one company over ... [+]
There is a difference between a repeat customer and a loyal customer. Some companies don’t know the difference. Just because a customer comes back, even repeatedly, doesn’t mean the customer is loyal – at least not to the company. Let me explain.
Sometimes a customer is loyal to price. As long as the company has the lowest price, the customer keeps coming back. If they find what they are buying from you somewhere else for a lower price, the customer walks.
Sometimes the customer is loyal to the location. Your company is closer than a competitor. In other words, it’s more convenient. If your competitor opens a store closer to the customer, the customer will take his business to the more convenient location.
True customer loyalty involves a connection between the customer and the company – an emotional connection. That connection may be the way an employee treats the customer. It may be the comfort of doing business with a place “where everybody knows your name.” There are many other ways customers feel connected to their favorite businesses. Most importantly, they enjoy the experience, which, by the way, must be consistent.
All that brings us to the topic of loyalty programs.
The goal of a loyalty program is to, as the name indicates, create loyalty – or at least a repeat customer. Sometimes loyalty programs are actually marketing programs. They don’t create the emotional connection, but they give an incentive for the customer to come back. There’s nothing wrong with that. However, when you can add the emotional connection, you have a winning combination.
A good loyalty program will help the customer to decide to do business with one company over another. According to Walker-Sands research, 63% of consumers say they modify their buying habits to maximize the benefits of a loyalty program. Think about the person who chooses to fly on a specific airline to get more frequent flier miles. Or the customer who likes to go to a restaurant that offers a free sandwich once their “punch card” has been filled.
With that in mind, I connected with Ed Eger, CEO at Rewards Network Establishment Services, who shared three mistakes that may be killing your rewards program.
1. Lack of Rewards: Eger believes brands should offer rewards beyond their own products and services. When an airline offers miles that can also convert to hotel stays or even merchandise, it strengthens its program. Amazon’s new program, Moments, allows businesses to select from millions of products for their customers. Variety is the spice of life – and it can “spice up” your rewards program.
2. Over-Discounting: Low prices are attractive to many customers, and as mentioned above, can be a reason some customers are loyal to a business. Eger believes brands must create a program that offers a valuable experience or reward that goes beyond low prices. After all, what happens when there isn’t a sale or the competitor down the street offers a price that’s just a little lower?
3. Lack of Convenience: This may be the most important mistake to avoid. If you want your loyalty program to stand out, make it easy. Eger states, “To break through the noise, brands must make their loyalty programs as seamless to navigate as possible.” For example, a credit card-linked loyalty program allows customers to collect rewards when they use their registered credit card. It’s easy. Once the customer signs up, every time a purchase is made using the credit card, the customer accumulates points. Customers don’t have to carry an extra card or remember a number. It just automatically happens. The key is the convenience – the easier it is for the customer to participate in the loyalty program, the more likely they will. Make it so easy they don’t even have to think about it.
The average person is a member of 14.8 loyalty programs. How many do you think they use? (Not many of them.) There’s a reason. Maybe the rewards, or lack of, make it not worth participating. Maybe price factors into the customer’s choice not to participate or continue to do business with the company. Or, maybe it’s just inconvenient.
All of these mistakes taken into account, there’s an idea that I want to emphasize. I mentioned that there is a difference between a loyalty program and a marketing program. Don’t confuse the two. Pursuing one or the other is fine. Just understand the difference. And, if you can combine them both, you can win the business and the hearts of your customers.
