Reality check loyalty programs
“Do you have a loyalty card?” “Would you like to register in our club?” “Do you already collect points, crowns, stars, or palm trees?” You all know the feeling – as consumers, we fight our way through the jungle of customer loyalty programs every day and often feel overwhelmed and annoyed by the offers and supposed advantages. For companies, this can result in disaster, as vast amounts of money flow into the development and management of loyalty programs. However, the reality check shows that simply offering a loyalty program is no guarantee of retaining valued customers in the long term. On the contrary: poorly positioned or only half-heartedly implemented loyalty programs can even lead to lasting frustration for loyal customers and result in the opposite of the actual objective – the customer turns away from the company. To achieve maximum frustration (or to actively avoid it), we have summarized the seven most effective tips using the example of Mrs. King, a particularly loyal customer.
The seven most effective tips
1) Maximum complexity
Admittedly, this is a no-brainer: Make your loyalty program so complicated that Mrs. King would be left stranded without the use of spreadsheets and has no chance of understanding her membership status, points system, or potential rewards. If, despite this separate research project, the structure and advantages of the program remain a mystery and it is clear as mud for your employees, you have very successfully taken the first step already.
2) Loyalty program update 16.0
Another step towards being top class is the irregular, abrupt, and frequent restructuring of your loyalty program. How does it work exactly? Those who were “premium members” yesterday, have only “bronze status” today and end up in the “basic segment” tomorrow. When Mrs. King no longer knows “who or what” she actually is, you are on the right path. Attention, additional benefits can be achieved here. Always restructure your program in such a way that Mrs. King has fewer advantages than before as a result of the restructuring. Ten “crowns” simply become “five palms,” which also have a much lower reserve value! When Mrs. King notices this straightaway, her frustration rises successfully and rapidly.
3) No card, no points!
“Do you have a loyalty card?” “No, but I have your app … ” “With that one you can’t collect points!” If Mrs. King can enjoy such dialogues at the cash desk, you have proven that you have made yourself comfortable in the analogue world of physical plastic cards. And Mrs. King is downright delighted – who doesn’t like to carry a separate bag for all the plastic loyalty cards in addition to their wallet?
4) Equal rights for all!
Loyalty should be rewarded, that is what rewards are for. So, in order to prevent any resentment in the community, offer the same rewards to all customers. Isn’t it great when Mrs. King receives a free men’s shampoo for her next purchase of ten euros as a thank-you for her loyalty? Customer relevance? Personalization? Completely overrated!
5) The fourth, fifth, sixth cooking pot
The attractiveness of the available rewards and benefits is a decisive factor in the success of your customer loyalty program. If your rewards were highly appreciated in your target group as early as 1990, why shouldn’t they be in 2019? You know from experience, for example, that cooking pots, knives, and discount hand mixers were already the bestseller 15 years ago? If, after several years of membership in your loyalty program, Mrs. King could equip not only her own kitchen but also several canteen kitchens due to a lack of relevant reward alternatives, you have also successfully taken this tip into account in your loyalty strategy.
6) Battles of new members and sleeping members
How do you recognize the success of your loyalty program? By the number of new members, of course! Cleverly enough, you design your loyalty program in such a way that the incentives for new members are particularly attractive – and particularly expensive from the company’s point of view. How can you recoup that money? With existing members such as Mrs. King, of course. If you manage to make your long-standing and particularly loyal customers feel treated unfairly and thus have them achieve non-active member status as quickly as possible, you are on the verge of finally destroying your customer loyalty program. Now only one step is missing to the top – with tip number seven.
7) Redeeming for beginners (and advanced)
If you have successfully put all previous tips into practice already, you can now achieve triple-A status by mastering the supreme discipline. How do you do it? Let Mrs. King work for her rewards. If she has actually managed to collect enough points, crowns, stars, or palms before they expire, she should not be able to redeem them for her new cooking pot “with just one click.” On the contrary: Mrs. King loves challenges! So, design the redemption process in such a way that Mrs. King must first use her spreadsheet program to find out and explore the paths and routes to the pot. Afterwards, you will delight Mrs. King with the news that the reward she has chosen is unfortunately no longer available. No more cooking pots? But if it’s not the pot – maybe the hand mixer? But only with extra payment – plus shipping costs!
Dr. Sabrina Zieren is a customer engagement expert in the consumer products & retail industry. She specifically focuses her work on the future of loyalty & CRM in the DACH region. You can contact her at firstname.lastname@example.org or +49 151 4025 1885.