customer engagement, consumer behavior, loyalty program
Loyalty programs are under increasing pressure to drive incremental growth.

Effective loyalty programs consistently deliver results across the metrics that matter to brands: foot traffic, basket size, frequency of visits and revenue.

But as successful as they’ve been, loyalty programs are under increasing pressure to drive even more incremental growth. Therefore, understanding program performance is critically important to program operators. And nothing indicates a well-performing program better than its ability to positively influence consumer behaviors.

Consumers expect a rewarding experience for their patronage – and meeting that expectation with a well-executed loyalty program can be more effective at driving repeat traffic than flash sales and a convenient location. According to the Excentus Road to Rewards 2017 report, 43% of shoppers say they shop at a specific store because it offers a rewards program. These brand-loyal shoppers typically determine their spending behavior based on a formula of: convenience + LOYALTY + price = value. If the variables of the formula don’t equate to value, shoppers will seek the benefits they desire from competitors.

Pinpointing Problem Areas

Based on the data, it’s clear that loyalty programs are generally very beneficial for brands. However, if a program isn’t delivering positive results, it can most likely be attributed to one or more of the following factors:

  • Weak value proposition: Program rewards are not appealing or the path to attain them is not worth the effort
  • Complexity of participation: Multiple steps are required to earn and redeem rewards, making for a less than ideal customer experience
  • Poor operational execution: Either the program isn’t as good as promised or the interactions weren’t positive at the moments that matter
  • Communications deficit: Lack of consistent reminders about the program’s value to maintain member awareness

Improving these challenging areas over time will give program operators better prospects for success. Merely putting a loyalty program in place and neglecting to manage and evolve it can transform a good strategy into a bad experience for shoppers. Loyalty programs, especially in a competitive industry, need to be nurtured and enhanced over time to maintain appeal.

Implementing Improvements

For brands with struggling programs, here are three actions to consider:

  • Embrace your data: The best solutions to loyalty program challenges are derived from your own customer data. Make sure you have the capability to capture data from a variety of consumer touchpoints and let that inform your loyalty strategy.
  • Consider the customer’s viewpoint: Focus less on selling products/services and more on what customers are purchasing, and what makes participation in the program easier for them.
  • Integrate personalized promotions: The messaging and offers should vary by shopper preference and be consistent across all touchpoints – in-store, through email, within the mobile app, on the website, etc. – to lift results for each channel.

With the analysis of an existing program and the implementation of the right program enhancements, an underperforming loyalty program can be revitalized to engage customers, increase sales and grow business. This leads to positive impacts for all stakeholders – senior managers, program managers, program members and program partners… and of course, consumers.

The first step towards program evolution is to analyze the existing program performance to make informed decisions. For that, brands may need to seek out a partner that specializes in loyalty programs and shopper engagement.

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