Customer loyalty programs are a great way to reward customers for their business. However, many of these programs fail due to common mistakes. In this blog post, we discuss the top reasons customer loyalty programs fail, and how you can avoid them.
How to train employees to promote your loyalty program
Send an email to employees about the program
Create a customer loyalty training video for your employees
Hold a meeting to discuss the customer loyalty program and answer questions employees may have.
Create a script that employees can use when talking about the program with customers like the one below:
“Have you joined our new rewards program? You get points for visits and referrals that you can redeem for rewards. It's free, but you have to sign up to participate. You'll get an email to join after you make a purchase."
2. Having complicated rules and procedures for referrals
The customer loyalty program should be easy for customers to understand and use. If the rules are too complicated, customers will not take the time to learn them. Additionally, if referrals are difficult to earn, customers will not bother referring friends or family members.
How to make your referral process customer-friendly
Keep the rules simple and easy to understand.
Make it easy for customers to refer their friends.
Automate the tracking process as much as possible.
A Perkville loyalty program, for example, can process referrals in four simple steps...
Customers share a special offer with their friends
Friends receive the offer via text, email, or social media
Friends claim the offer by entering their information and become a lead for the business
Friends make a qualifying purchase and the original customer automatically earns referral points
3. Failing to create rewards that are motivating enough without costing too much
Rewards should motivate customers enough to participate in your loyalty program. But not so much that the program becomes too expensive. Without striking the right balance, your loyalty program may fail due low engagement or high cost.
Choose the right rewards for your customer loyalty program
Rewards need to be valuable and relevant for customers. For example, a health club can motivate customers with discounts on monthly membership fees. Or free locker access.
At least one reward should be achievable within 3 to 6 months. More expensive rewards can take longer to earn for the average customer.
Use the opportunity to cross-sell products and services. For example, a salon could offer its clients free samples of hair care items. While a yoga studio can provide discounts on its retail goods.
4. Offering too little or too many rewards to customers
It's important to offer customers the right amount of rewards. Too few and there might not be an option that appeals to them. Too many and you risk overwhelming them with too many choices.
How to find the right number of customer loyalty program rewards
When determining the number of customer loyalty program rewards:
A good place to start is 3-5 offers
Straightforward offers are better (e.g. $5 off your next purchase, a free guest pass). Rewards should be easy to understand and explain.
Offer a variety of rewards that cater to different customer needs and preferences.
Add new rewards gradually over time to keep customer interest high.
5. Failing to promote the customer loyalty program
Promoting your program can have a big impact on its success. The more customers that participate the greater return on investment you’ll get.
How to promote your customer loyalty program
Include information about the program on all marketing materials (e.g. website, email signature, newsletters).
6. Underestimating the amount of work required to manage and run the program successfully
Running a customer loyalty program takes time and effort. Many moving parts need to be managed and monitored. If you underestimate the amount of work required, your loyalty program may become unmanageable.
How to successfully manage a customer loyalty program
Designate someone on your team to be responsible for the program. This person can be in charge of tasks such as customer support, managing rewards, and tracking progress.
Create a process for enrolling new customers and issuing rewards. This will help to ensure that the program runs smoothly and efficiently.
Set up a system for tracking customer activity and engagement. This will help you to identify trends and areas that need improvement.
Regularly review the customer loyalty program to ensure it is meeting customer needs. Make adjustments as necessary to keep the program relevant and engaging.
You can probably manage these tasks on your own. But as with all routine processes, loyalty program software makes things easier. Perkville, for instance, integrates with many popular point of sale (POS) Systems like MindBody, LightSpeed and Shopify. And it can automate customer enrollment, and earning and redeeming points.
7. Failing to measure the success of the customer loyalty program
You won't know if your customer loyalty program is successful if you don't measure the results. Tracking progress will help you to identify areas that need improvement.
Some examples of metrics you can track:
For membership based businesses, % of members enrolled
% of purchases from loyalty program members
New customers from referrals
Customer satisfaction rating
Repeat business rate
Customer loyalty software like Perkville can provide reports that show customer activity like redemptions, and referrals. This data can be used to measure the success of your customer loyalty program.
Run a successful customer loyalty program
We hope these tips will help your program be successful. For more advice on rewards programs and how to create loyal customers, check out these blog posts: