Studies confirm appealing to customer preferences is key to loyalty program success

Loyalty programs remain a powerful strategy for companies looking to build relationships and lifetime value with customers, but the industry is evolving and there are challenges ahead. While loyalty program membership has never been higher in the U.S. with 3.8 billion memberships, according to a 2017 Loyalty Census, more than half of them (54%) are inactive. A total of 4,513 people across the US and Canada were interviewed for this Census, which stirs in additional research on loyalty programs to unveil some intriguing revelations.

What do people want?

The top three reasons people gave for active loyalty program participation were ease of use, easy to understand, and great discounts. Not surprisingly, the study mentioned the importance of easy access to loyalty programs via smartphones and other mobile devices to clearly see rewards information.

This chimes with our own CodeBroker Mobile Loyalty Survey of 1,207 U.S. consumers, which found that 71% of respondents said they would be more likely to use their loyalty cards if they could access cards and rewards on their smartphones and 70% said they would use a mobile version of their loyalty cards if they didn’t have to sign into a website or download an app.

Mobile is a platform with several distinct channels and what appeals to one consumer may not appeal to the next – and therefore it is important to take an omnichannel approach. Ideally, loyalty programs should offer consumers multiple points of access including text, mobile web, mobile app, email, digital wallets and social media.

Being able to access loyalty program and offers on a preferred channel is important to consumers. Don’t force them in one direction, but rather cater to their needs. It’s also worth noting that an omnichannel approach leads to an average basket size that’s 13% higher and 11% more profitable, according to an EKN mobile loyalty study.

Why people leave loyalty programs

Respondents to the Loyalty Census on the question as to why people abandon programs broke down as follows:

  • 57% said it takes too long to earn points and rewards;
  • 53% said that programs do not provide enough interesting rewards or offers;
  • 38% claimed that programs send too many notices.

Consumers want a personalized touch. They want to receive offers and communications that resonate with their interests. It’s worth spending some time and effort on analyzing your customers’ preferences and feedback to determine what channels they prefer to use for program access and what kinds of offers appeal to them most.

A lot of retailers and businesses already have the data they need for program success. Consider that 74% of respondents to a Forrester survey said that they collect customer preference data, but only 45% of them actually use it to personalize loyalty offers, communications or other interactions. It’s a big missed opportunity.

Connecting with customers

Perhaps the most alarming statistic in the report is that 28% of Americans abandon a loyalty program before redeeming a single reward.

Customers must be able to see the rewards they’ve earned and grasp how the program works immediately. Clarity is crucial, as the CodeBroker Mobile Loyalty Study confirmed, with almost 40% of respondents saying they didn’t even realize a reward was available. Make it as easy and frictionless as possible for them to check their points balance and redeem their rewards. And make it accessible via mobile devices.

Consumers not only have a preferred channel to access loyalty programs, but they also have a preferred channel to receive loyalty program communications, such as rewards updates, expiring rewards, promotions, etc. The challenge for loyalty marketers is that we often don’t know the communication method preferred by each individual member.

By employing the right contact strategy for each member, loyalty marketers can improve member insights into rewards status and drive higher levels of engagement and ensure more relevant, consistent messaging across channels. Loyalty marketers can take steps to identifying members’ preferred communication channel by providing a range of sign-up options on the front-end. Consumers will more often sign up via their preferred channel, giving marketers information they need to communicate effectively.