Four Signs Your Loyalty Program Needs an Overhaul, Part 2

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Social media is a two-edged sword. It helps brands reach their targets in a more organic way, and it helps customers wield wider influence.

In part one of this series, I discussed how a lack of specific metrics and a one-size-fits-all approach are signs that a retailer’s loyalty program needs an overhaul. Here are two more indicators:

Social Media Leaves You Cold

If you’re not seeing the love online, it’s time to upgrade your loyalty program to create more brand ambassadors.

Today’s customers are all over social media, posting content about their newest purchases, their VIP treatment or members-only events and discounts. They’re also all over social media complaining about their latest retail experiences that fell short.

A social media analysis by Capgemini Consulting compiled all the positive and negative opinions expressed by social media users about or mentioning a loyalty program. For the retail sector, 93 percent of the opinions were negative. Loyalty program members complained about a lack of relevant rewards, inflexibility, and a lack of perceived value (44 percent). Next was a lack of a seamless multi-channel experience (33 percent), expressed primarily as complaints that one couldn’t do the same things online as in store, or that rewards could only be earned or used via one channel. Another 17 percent of the complaints were about customer service issues.

Social media is a two-edged sword. It helps brands reach their targets in a more organic way, and it helps customers wield wider influence. When people were unhappy with a store in the past, you could count on them to tell an average of nine people. But with hundreds of followers on social media, the damage can be much more widespread.

Traditional reward structures don’t support this new reality. To increase your positive share of voice, customers must be recognized and rewarded not only for their purchases, but also for engaging and interacting with the brand in other meaningful ways such as sharing content and feedback, writing reviews, and participating in game-based campaigns.

Lancome’s Elite Rewards loyalty program, for instance, strongly incentivizes brand advocacy. While members receive 10 points for every dollar they spend on Lancome merchandise, they receive up to 25 points for sharing Lancome’s product posts on their Facebook, Instagram and Twitter pages.

This tells customers that the brand values their support. The retailer benefits when customers then endorse the brand’s messaging to a receptive audience, since consumers tend to trust word-of-mouth recommendations from people they know more than they trust traditional advertising, according to Nielsen.

There’s a Digital Disconnect

If you’re still paper or plastic; if your digital offering is limited to a website login; if your “mobile strategy” is a reference to wheeled shopping carts; it’s time to reprogram your loyalty offerings.

Plastic and punch cards are dead. Customers want mobile, anytime access to their points balance, reward offers, discounts and invitations. Program members are frustrated by not remembering to bring printed coupons, and in a CodeBroker survey 71 percent of customers said they would be more likely to use their loyalty cards if they could access these cards and rewards from their mobile phone.

There are two aspects to this digital imperative. First, is to connect the back ends of your retail POS systems, online webstore, marketing tools and customer service centers, with your customer, product, and inventory data. Information about the customer and her preferences, purchase history, loyalty status, and other interactions must be in sync across all channels.

Second, is to increase and extend the flexibility of your mobile offerings. Customers want more than a digital loyalty card. They want a VIP, all-access pass that enables them to not just redeem offers through the channel of their choice, but to earn more rewards and experiences through participation—be it surveys, games, reviews, ratings, referrals, or more.

Sephora is using digital technologies to deliver a superior and connected customer experience. Members of Sephora’s “Beauty Insider” loyalty program can sync their loyalty accounts with Sephora’s mobile app as well as the Apple Passbook mobile wallet. Using mobile devices, customers can track their purchases, view offers, and redeem reward points on the go. The strategy has worked: Sephora’s customers who use Apple Passbook on an iPhone spend twice as much and purchase twice as often as the average Sephora customer.

As I argued in my recently published Apparel Magazine article, loyalty programs must evolve to help close the gap between customer expectations and retail store realities. If either of these two indicators resonate with you, consider how you might put pivot to put human-centered exchanges at the center of your loyalty program, supported by mobile and digital solutions.

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