The 9 Most Common Loyalty Program Mistakes that Ecommerce Retailers are Making
Updated: Aug 22, 2019
Loyalty programs are such a cornerstone element of retail that most ecommerce based brands often think that any loyalty program is better than no loyalty program, especially when resources are tight and the team is trying to juggle a multitude of tasks at hand to propel brand growth. Unfortunately, the “anything is better than nothing” point of view is one of the worst ways to think about your brand’s loyalty program. Consumers are much more discerning and critical of the brand experience today than ever before, and available technology can make managing a highly engaging and successful program easier than expected. However, even in today’s rapidly changing and flexible loyalty landscape, many direct-to-consumer and ecommerce based retailers are falling into traps often seen from legacy brands. Unfortunately, making these mistakes is easy, and can result in a program ranging from mediocre to even creating an unnecessarily negative customer experience. Just as it’s easy to fall into these traps, it can be easy for brands to make some small tweaks to remedy the situation.
Below are the 9 most common mistakes we at K+H Connection have seen and some quick-action steps to improve your loyalty program.
1. Not celebrating new members
When a customer signs up for a loyalty program, they’re acknowledging they want your brand in their life. Getting the customer to say yes is no small task and should be celebrated—the customer needs to know you appreciate them. When a customer opts in, it’s an open invitation and essential moment for communication. Some brands may stop here thinking the job is done. However, it’s the brand’s job to affirm the customer’s decision and let them feel special.
Consumers often opt-in to loyalty programs as they check out with an order, this is a great opportunity to not only send an order confirmation email but a welcome email as well. If you want to take it one step further, offering something tangible such as a promotional code can make the experience even more exciting. This offer can even be included in the delivery as a physical welcome card as well as sent as a digital offer around the expected time of the order delivery.
2. Treating a loyalty program like an email list
An email list is not a loyalty program and a loyalty program is not an email list. They are two distinct types of marketing tactics and each can fuel the other. Additionally, depending on when the ask of the customer is made, both have advantages and disadvantages. When a customer lands on a home page, they’re likely to opt-in to an email list for a promotional offer but not commit to a loyalty program. In contrast, a customer is more likely to sign up for a loyalty program at check out in order to get some sort of reward for their impending purchase rather than simply indicating they want to be on an email list.
3. Assuming people know the program exists and understand how to sign up
Simply offering a loyalty program isn’t enough to trigger customer engagement—showing them the way to engage with it is key. Redeeming rewards is the end goal for a customer, it is the brand’s job to remove confusion and show how they can get to that goal. Loyalty programs need to be clearly and consistently marketed to not only fuel growth with new members, but to also encourage people to redeem their points.
4. Having no direction
For many newer brands, offering a loyalty program is as easy as turning on the platform’s capability. However, before turning on the functionality, it is essential to understand what the starting goal of the program is. Initial program goals can be broken down into four categories:
new customer acquisition
increasing spend from current customers
enhancing the current customer experience
driving customer spend to other, often higher margin, items
A mature and well-developed loyalty program can address all four of these goals but it’s best to start with one as primary goal.
5. Ignoring the data
Many loyalty program platforms promote the idea of the system being “set it and forget it”. When resources are tight, having an easily managed strategy is key. Yet, with that mentality many brands are missing out on one of the best pieces of a loyalty program—the data! Creating a regular review of pre-determined program KPIs that connect with the program’s goal may require some work up front, every brand has different reporting needs, but once a system is established it will be one of the most valuable tools available to guide the program’s long-term growth.
6. Making rewards redemption confusing
The process to redeem a reward from a loyalty program is one of the most important moments in the loyalty member cycle and should be a seamless transaction. The customer should be able to easily redeem rewards one their schedule.
Three key things to avoid when developing a redemption system include:
offering product rewards that can only be redeemed at the time of another purchase
having points or rewards expire
having a narrow redemption window
Today’s customers expect to be able to customize their rewards on their terms. Remember, rewards are just that—rewards, not additional offers or promotional prizes.
7. Forgetting the VIPs
It’s best practice to develop a loyalty program with multiple tiers. This allows customers to customize the rewards the cadence of the rewards received—some like to see smaller rewards more often while other prefer larger rewards over a longer period of time. No matter their rewards redemption style, many reports indicate that the higher level a customer is in a loyalty program, the less likely they are to defect to another brand.
While tiered programs can offer premium rewards for the highest spenders, it’s important to remember the big picture for customer experience. Offering additional moments of unexpected rewards is key to developing a loyalty program that stands out from the rest. These types of rewards can be as simple as a thank you email, a unique promotion, or even exclusive merchandise.
8. Focusing solely on transactions
A well-developed loyalty program is one that will not only reward purchase loyalty but further support the development of brand loyalty. One of the easiest ways to do this is by offering rewards when customers complete other behaviors such as leaving product reviews, completing surveys, or sharing brand or product information on social media. In the age of social media and the micro-influencer, this can look like the implementation of a referral program as part of the loyalty program. By incorporating other behavior beyond purchasing, brands can gain invaluable insight about how a customer interacts with the brand before, during, and after their purchase.
9. Keeping the program isolated
Loyalty programs offer consumers added brand-specific value and are just one element of a full branded currency program. Through interdepartmental connection and collaboration, a loyalty program’s capabilities can be utilized to drive additional key business initiatives and support other departments in new and innovative ways. When connected to other offerings such as the brand’s gift card and additional marketing communications, the loyalty program can become one of the most powerful tools to stand out among competitors, gain unique consumer insight, and keeping customers excited and engaged.