One of the biggest challenges in the loyalty industry today is keeping members both active and engaged. This is increasingly apparent as the average American household participates in 29 different loyalty programs, yet is only active in 12. To overcome this challenge, many brands and merchants are considering making changes to their loyalty programs in hopes of influencing consumer behavior and driving loyalty among both existing and future members.
But when contemplating change, programs must first ask themselves why they’re doing so. Are you looking for consumers to spend more? Are you looking to build membership? It’s important clearly define and understand what you’re hoping to get out of the change in order to build a definitive message and story for the consumer. Otherwise, the consumer might just do that for you.
Take Starbucks as an example. In early 2016, Starbucks gave its loyalty program a significant overhaul. The program shifted from rewarding customers based on the number of purchases they made to rewarding them based on total dollars spent. For those whose order totals tend to be on the higher end, such as customers who order a drink and a food item, they were pleased with the changes. However, Starbucks received a lot of negative feedback from customers who simply order a cup of coffee, as it now takes them much longer – and costs more – to earn a free drink.
It’s clear that changing an existing loyalty program can have its fair share of risks and benefits. However, there lies a balance between keeping in mind and catering to the needs of consumers, while simultaneously making a change that will ultimately help reach the program goals. In order to lead to both increased loyalty and profitability, here are some of the steps brands can take to ensure a smooth transition that won’t have customers running to competitors.
Understand the changing loyalty landscape
Programs and their currencies are constantly expanding and changing. Customers are looking for more opportunities to earn miles and points through purchases on retail, food, travel and even by interacting with other loyalty programs. As a result, loyalty program currencies are becoming increasingly flexible. Take Southwest Airlines for example, whose members can exchange hotel loyalty points from Hyatt Gold Passport and other hotel loyalty programs for Southwest Rapid Rewards.
Additionally, consumers want to be rewarded for their continued brand loyalty across all touchpoints with your brand. Consider creating engagement-based loyalty offerings, much like Marriott Rewards’ recent promotion where new followers of the brand’s Instagram page received 500 rewards points. Or, think about integrating your existing loyalty program into a mobile wallet platform. Through our Points Loyalty Wallet, we help loyalty programs provide their members with the ability to earn points at a variety of retailers when making a purchase, increasing their program engagement.
Ensure the change is what you and your members want
First and foremost, it’s vital for any loyalty program undergoing a change to understand why they’re doing so. If the program itself doesn’t define the rhyme and reason for making the change, the consumers won’t understand either. Likewise, before implementing any changes to your loyalty program, do your due diligence and conduct extensive research to ensure the proposed changes benefit your members. This can include asking members what they like and dislike about the program and soliciting recommended improvements.
Along with ensuring you’re making the best changes possible, customers who feel like their opinion is valued will be more likely to engage in the future. And of course, after making any changes to your program, take a look at your metrics. Have revenue and engagement increased or decreased? If so, your loyalty program members might need some further adjustment depending whether or not your customers are satisfied with the changes.
Make sure changes to your loyalty program are clear
When you make a change to your loyalty program – no matter how small – always alert loyalty members so they’re not caught off guard. Don’t hesitate to over-communicate. It’s better to share as much information as possible, rather than leaving customers concerned and asking questions. And in the same light, make sure to craft your own message regarding the change, rather than having the consumers’ response be your message.
Sending an email to all loyalty program members is an easy first step. For example, provide an update on where your loyalty program stands, what the intended changes will be and what that means for your customers. And consider providing a list of common questions and answers, as well as contact information if customers have additional feedback or concerns. Also promote the changes on social media and any other marketing channels your brand typically uses.
Your customers are loyalty program members for a reason – they value your brand and want to keep coming back for more. Therefore, it's important for loyalty program members to be aware of what offerings their loyalty programs provide, and how the industry is changing to fit their needs and desires when it comes to earning and burning their points. Making changes to your loyalty program is an exciting opportunity to better engage with customers, and by keeping the lines of communication open, you can help customers recognize the coming benefits.
By Danielle Brown, vice president of marketing at Points
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