Why Your Loyalty Program Isn't Working (and how to fix it)
Quick, without googling it, can you tell me the definition of loyalty?
If your first thought was “repeat purchases” you’ve hit the nail on the head of why your loyalty program probably isn’t working.
Here’s what actually comes up when you google ‘define loyalty’:
Loyalty: [noun] a strong feeling of support or allegiance.
Notice there’s no mention of purchases? In fact, the word that matters most in that definition is “feeling.”
Repeat purchases don’t equate to loyalty. They’re the result of a feeling of loyalty -- the action that customers take when they feel loyal. If your customers don’t have an emotional attachment to your brand, then they aren’t actually loyal -- they’re just making purchases.
If you’re thinking “who cares” consider this: when there’s no emotional implication, people tend to make purchase decisions based on other factors, like price.
They don’t care about your brand -- they care about saving a few bucks.
That kind of “loyalty” isn’t sustainable. You’re always at risk of a competitor lowering their prices and your customers jumping ship. So instead of inspiring real loyalty, your loyalty program ends up feeding bargain hunting.
When you only think about loyalty in terms of purchases it’s easy to focus too much on generating sales instead of addressing the motivation behind those purchases.
People don’t just develop brand loyalty because you give them a couple percent off your products. There has to be an emotional connection.
Your loyalty program has to be the platform for creating and maintaining these emotional connections.
A Shift to Brand Admiration
Have you ever met someone and just known you’re going to be good friends?
Do you remember why you felt that way? Maybe it was a shared belief or common interest. Maybe you admired something about them. Maybe they helped you out when you needed it.
Those same feelings you base friendships on are also at the centre of successful consumer relationships (1):
Trust: consumers feel empowered, in control, and relieved of specific pain points
Love: consumers have an emotional connection to the brand
Respect: company and consumer values are aligned
Your loyalty program needs to showcase these values. You have to show customers they can trust your brand by addressing pain points and offering them control over their information.
You need to show them that you have values in common, that you support the same causes as they do.
I’m not gonna lie, it’s not an easy mission.
But there are some simple steps that’ll help get you started.
Encourage Engagement with Gamification
Having people in your loyalty program means nothing unless they are actively engaged. But to drive that engagement there has to be additional value for the consumer.
Why should they engage with your program? What’s in it for them?
Gamified elements in your loyalty program tackle this issue by making it fun to use the program. They provide value for consumers when they engage repetitively by “leveling them up” and awarding more points to more active members.
I’m not suggesting that you just throw badges onto your current program and your engagement rate will skyrocket (it won’t). But there are some strategic ways you can add gamification elements to grab consumers attention, encourage repeat engagement, and inspire brand admiration.
Progress indicators (like levels) are effective at encouraging repetitive engagement because they make it hard for us to stop playing. They tap into our completion instincts - our natural curiosity about what lies ahead.
Examples of progress indicators include level based reward structures, progress bars, and avatars that change as members level up.
Including a branded game in your loyalty platform gives members another reason to engage with your program. It makes repetitive engagement fun -- even addictive.
Your game can also serve as a solution to a customer pain problem. For example a grocery store can include gamified recipes. A clothing retailer could let customers build outfits. These kind of experiences offer consumers even more value (in the form of entertainment and convenience) for engaging with your loyalty program.
You can also nest brand messaging into the game, boosting the amount of time members spend engaged with your brand.
Reward for More Than Just Purchases
Purchases aren’t the only way customers show their loyalty. They also recommend your products, talk about your brand on social, and engage with your content. All of those actions can have an impact on your bottom line - yet they aren't rewardable actions in most loyalty programs.
Instead of only rewarding for purchases, loyalty programs need to start rewarding for active engagement. Engagement that goes beyond just buying your stuff.
Other ways to earn points could include:
Updating profile information
Inviting friends to join the program
Sharing on Social Media
Playing Branded Games
Having a variety of options for earning rewards shows customers you care about them and their actions -- not just your bottom line.
Personalize Your Program
A recent study found that members who are satisfied with the level of personalization they receive in a loyalty program are 8X more satisfied with the program itself (2). It makes sense -- why would customers be less satisfied with a program that’s more relevant to them?
But personalization doesn’t just match products to people to sell more. Good personalization nurtures customer relationships by:
Solving pain points
Creating an emotional connection
Solving customer pain points improves their experience, which in turn makes them feel more positive about your brand. An easy way to tackle this is to look for areas where you can offer more convenience.
Addressing this pain point can be as simple as offering product recommendations. Recommendations inspire brand admiration in two ways:
Trust: They solve a pain problem by offering convenience. Consumers don’t have to search through tons of products to find something they like.
Love: They create an emotional connection by showing only relevant information. Consumers feel like your brand understands them.
The combination of convenience and emotion can be a powerful motivator of loyalty.
Think about two of the most successful loyalty programs in the US: Amazon Prime & Starbucks Rewards. They not only have personalization elements, like recommendations, personalized offers, and targeted content, they tackle customer pain points to make shopping more convenient.
Amazon Prime addresses one of the most annoying parts about shopping online - waiting for your stuff to show up - by offering free 2 day shipping.
Starbucks Rewards lets customers order drinks ahead of time and pick up in store, as well as pay for those orders with their rewards points, an exceptionally popular feature with their busy, on-the-go consumer base.
Both of these programs have been wildly successful. Amazon Prime has been the top rated retail loyalty program for the last 3 years straight with over 40 percent of Americans currently holding a membership (4),(5). And Starbucks Rewards produced over $5 billion dollars in revenue last year in the US & Canada alone, up 19% year-over-year (6).
Their loyalty programs aren’t your typical points for purchase program. Instead both companies combine emotional factors like personal recommendations, offers, and content with a frictionless shopping experience to create a extremely loyal consumer base.
The Bottom Line
When you only reward for purchases, you show your consumers that money is the only thing you care about. There’s no emotional appeal, no real loyalty.
And when your consumers don’t feel appreciated, they don’t develop an emotional connection. This leaves you open to a price slashing war with your competition, as your ‘loyal’ consumers jump ship for cheaper products.
If you want loyal customers who not only help grow your bottom line, but also act as brand advocates, bringing in new shoppers and promoting your brand on social, you have to give them more than a few bucks off their purchases.
You have to nurture relationships with your customers. You have to treat them like individuals.
You have to aim not just for repeat purchases, but for admiration.