Customers and businesses have high hopes for loyalty programs, as they should. The potential of investing in returning audiences by offering unique benefits is huge, but only if you get it right. Unfortunately, recent data proves that while businesses understand the importance of loyalty programs in theory, many struggle to build them effectively. Here’s one upsetting result of analog loyalty programs you should know about and a few easy digital solutions.
Understanding loyalty frustration
One common scenario is that of a loyalty program offering points and coupons that customers never actually use. This may be because they leave their membership cards at home, forget to check the coupon list, or allow a special offer to expire. As a result, the average offline loyalty program redemption rate is less than 14%, and 38% of shoppers refrain from joining these programs because they don’t believe they’ll receive any value.
But an even more alarming outcome of unused loyalty benefits is customers’ loyalty frustration. When customers learn that they missed a chance to use their loyalty benefits, they get mad at themselves and the business, questioning the program’s worth. Every purchase from the brand is accompanied by FOMO. The fear that a better deal is hiding somewhere, to be discovered only when it’s too late. What was meant to be an exceptionally positive experience becomes a negative memory that reflects poorly on the brand.
According to the Harvard Business Review, recent research discovered “the boomerang effect of loyalty programs.” Loyal customers who encounter disappointing experiences feel a deeper sense of frustration and become more upset than those who never joined the program to begin with. We can assume that one reason for this is higher expectations from the business and the frustration of losing an opportunity to save money. Instead of happy, loyal customers, businesses end up dealing with frustrated shoppers who stare at a pile of unused coupons and doubt the establishment’s relevancy.
Overcoming the challenge
Digital loyalty solutions can overcome this obstacle using simple, intuitive mechanisms:
- Online membership access: People rarely leave their smartphones at home, making a loyalty app the most accessible and reliable alternative for physical membership cards. Digital loyalty cards and points are always a tap away. This isn’t just a practical solution but also a way of letting customers know that the business owner understands their daily habits and caters to them. In addition, mobile presence opens the door to more communication channels, as we’re about to see.
- Alerts and notifications: Instead of expecting customers to remember or check special offers before they expire, businesses can send notifications to remind them of any deals that shouldn’t be missed. Research finds that one of the benefits loyalty members value most is alerts letting them know when desired items are on sale.
- Automatically including deals and coupons: Don’t ask customers to sift through physical coupons and see if they can find anything relevant. A digital loyalty program can simply add any applicable benefit and inform customers of how much they saved. This technology eliminates any FOMO and brings only good news and joy to customers, proving time and again that joining the program was a smart move.
- Geo-based targeting: Once your loyalty club is installed on customers’ phones, you can tell when they visit your location. This enables you to send relevant greetings and special on-premise deals to make each visit memorable and pleasant. It’s important to be subtle and offer value with every text you send so that customers never feel stalked or burdened with excessive messages.
When your customers are frustrated — you’re frustrated. Physical, manual loyalty solutions can disappoint where digital innovations live up to the promise and exceed expectations.
The above features take loyalty programs’ success from theory to practice. Uncover more ways to minimize customers’ loyalty FOMO and maximize your plans’ value by contacting Glue’s loyalty experts.