Seeing a dip in customer retention? Learn about the problems with loyalty programs.
The popularity of loyalty programs is growing. In the last year, 64% of brands reported an increase in loyalty program membership.
Customers like brands with loyalty programs. But they aren’t shy to retract their loyalty if the program doesn’t meet their expectations.
78% of customers say they leave bad loyalty programs at the drop of a hat.
But what exactly are the problems that make customers retract their loyalty?
If you want to understand the reasons and how to solve them for your Shopify loyalty program, this blog is for you.
Customers join reward programs for rewards. But what if they realize the rewards aren’t as valuable as they had thought? They might leave your loyalty program.
Now let’s understand when rewards don’t offer value. Say, for instance you offer points for every purchase. However, to redeem those points, customers have to reach a significantly high number of points they might take months or years to earn. Besides, it’s an expensive affair.
Another drawback in your loyalty program is you offer few opportunities and ways to earn points. And so customers aren’t able to earn enough points to use them.
- Create a strong points system keeping customer benefits in mind
- Don’t be afraid to reward non-transactional actions
- Create many ways for customers to earn rewards
- Make your points system realistic and achievable for customers
- Allow customers to pay with a combination of points and cash
For customers, the most important factor to choose eCommerce brands is convenience. 97% of customers back out because they experience inconvenience. And that’s true for your loyalty program, too.
To understand whether or not your program has convenience at the heart of it, scrutinize these aspects of your program:
- Is it easy or difficult to sign up for your loyalty program?
- How long does it take for customers to complete the sign-up process?
- Do your customers know all the ways in which they can earn and use the points?
- How easy is it to redeem points customers have accumulated?
In short, a complex loyalty program is a bad loyalty program. The above are some questions that will help you assess the convenience quotient of your program. And if you’re failing them at this most important factor, consider these ways to simplify your program.
- Create a separate page to explain your loyalty program
- Make the sign-up and login process quick and easy
- Enable social login so that customers can login faster
As discussed earlier, customers expect brands to provide them a convenient experience. Customers don’t want to feel like they’re having to do a lot of work to make purchases or enjoy the benefits of your Shopify store.
One of the most critical factors of customer convenience is sign up processes. If you provide a complicated, lengthy, and tedious sign up process for your loyalty program, don’t expect a high number of sign ups.
Four out of five customers (86%) of customers feel bothered when the sign up processes are lengthy. They want short login processes that are easy to understand and complete.
Moreover, customers also like to choose how they want to login. A study found that 77% of customers prefer brands that allow social login. They also consider these brands to be innovative and up-to-date.
- Create a short registration process for your loyalty program
- Enable social login
- Let customers choose how they want to login
- Enable save password and auto login every time customers want to sign in
You might have set up a good loyalty program with customer benefits at the heart of it. But if you don’t let customers know about your program, it will remain underutilized.
Your customers might be a part of many other loyalty programs. On an average, people join 14 loyalty programs. So, they might not want to be a part of more.
As a business, you must ensure your customers know about your loyalty program. Not just that, they should know how your program can benefit them.
But if you neglect your program communication and promotion, there’s no way you can maximize its potential.
- Create a dedicated page for your loyalty program on your Shopify store
- Make loyalty programs a part of your customer account page
- Use a customer account page app that can easily integrate loyalty programs
- Promote your loyalty program on different channels
Another problem with loyalty programs is when brands launch at a big scale, but don’t keep up. Say for example, you’re launching a loyalty program. You may want to include every feature in the program. But is it practical to do so at the beginning?
When you try to do this, you invest a lot of resources. Moreover, it can delay the development process. Another drawback of launching with all features at one go is that you won’t be able to give fresh experiences to customers later on.
For example, if you launch your program with tiers, gamification, contests, prizes, discounts, surprise gifts, badges, etc. One the initial excitement dies down, you won’t be able to introduce too many new features to engage customers.
- Build your loyalty program step by step
- Launch with basic features
- Keep introducing new features over time to keep customers’ experience fresh
- Keep the engagement alive
- Introduce new features with equal excitement and zeal to get customers excited
If you think setting up a flashy program with great benefits is all it takes to run a successful loyalty program, you’re wrong!
When customers join your program they get into a long term relationship with you. And they expect you to acknowledge that.
One of the best ways to succeed with your loyalty programs is constant communication. Infact, you should have a robust loyalty program communication strategy.
Because if you don’t keep in touch with your customers, they feel left out, not cared for, and ignored.
- Create a communication strategy for your loyalty program
- Keep sending updates to customers about your loyalty program
- Create a community of your loyal customers and give them opportunities to engage
- Celebrate your program members achievements
- Use multiple communication channels such as email, SMS, livechat, etc.
You might be offering many different types of rewards to your customers. But still, your program isn’t doing well. What could be the reason?
One of the biggest problems with loyalty programs is that brands don’t personalize the rewards and offers. They give irrelevant rewards to customers.
80% of customers want a personalization in the loyalty program. It improves their loyalty program experience. And if customers don’t have a good experience, 68% of customers leave it.
Let’s look at how to ensure you offer relevant rewards to customers.
- Set up a ‘wishlist’ feature on your Shopify store
- Combine wishlist and loyalty programs
- Offer extra rewards on products in customers’ wishlists
- Enable customers to redeem points to buy items in their wishlists
You competitors are always trying to poach your customers. So, if you get complacent, you might lose your loyal customers.
For example, you launch your loyalty program with many features. If you do so, you won’t have anything new to add to your program. Customers might start feeling bored.
Another example of short-term thinking in loyalty programs is having a simple points structure and ignoring tiers. When you have a tier-based program, your customers automatically stick around longer because they would try to progress from one tier to the next. In a simple structure, there aren’t too many goals to achieve.
- Create a tier-based rewards structure
- Give customers challenges to achieve – gamify your program
- Use tactics such as offer them extra points when they reorder products from your site. That way they get into a habit of reordering products to earn more points
- Keep adding new features and rewards from time-to-time to keep the excitement going
Customers have different preferences for communication channels. Have a look at the below graph.
Today’s savvy customers are present on many different communication platforms. They use multiple channels, such as social media, live chat, phone, WhatsApp, email, etc.
Also, customers use all these channels from their phone. And hence, they expect brands to have an omnichannel presence, of which mobile is a common factor.
- Have as many communication channels as possible
- Include social media, live chat, phone, email, SMS, etc. in your communication suite
- Use eCommerce loyalty program tools that can help you integrate all your channels
- Set up a loyalty program mobile app that customers can access on the go
- Make sure you integrate your channels to give customers a consistent experience
Almost all brands offer points towards purchases. There’s nothing new in it. But if the only way customers can earn points on your eCommerce site is through purchase, customers will lose interest because they have to spend more to earn points.
Today’s customers expect loyalty programs to engage them beyond purchases and monetary transactions. And if you think that’s not possible or that would eat into your profits, you’re wrong.
The more you engage customers, the more points they can earn through your loyalty program. And the more they will feel encouraged to spend on your site.
There are many more touchpoints in the customer journey through which you can add value to them.
- Offer store credits for writing product reviews
- For social media likes and shares
- On customers birthday and anniversary
- On customers yearly anniversaries with your brand
- For referring their friends
- For sharing your product images and tagging you on social media
- Personalize rewards
- Use a reward points app to automate the process
Your loyal customers are your best brand ambassadors. If they like your brand and your loyalty program, they’ll definitely talk about it in their network.
92% of consumers trust referrals from people they know. A referral program within your loyalty program is one of the best ways to attract authentic and genuine new leads.
And yet, brands tend to overlook referrals. That’s because they might think it’s an added cost and too much effort and doesn’t yield results. Referred customers convert at a rate 30% higher than leads from other marketing channels.
- Include a referrals program within your loyalty program
- Reward your existing customers as well as the newly acquired customers
- Be smart about rewards. Give rewards only after new customers sign up and make purchases
- Talk about your referral program on other communication channels
- Run a campaign to promote your referral program
When you offer the same incentives and benefits in your loyalty program, customers are bound to get bored after a point. Even if you have a tier-based structure, once customers progress and reach the higher level, at some time, the novelty factor tends to wear off. This is one of the biggest problems with loyalty programs. The result: lack of excitement, engagement, and churn.
For example, say you offer discounts on every purchase, store credits for actions such as social media likes, shares, referrals, etc. Your customers will enjoy these benefits for some time. But they’re not enough to attract them forever.
- Keep adding new incentives and benefits from time-to-time
- Give them surprises. For example, extra points, a free gift, etc.
- Keep introducing new benefits to keep them engaged
You may have set up a good loyalty program that offers excellent benefits and rewards. You promote the program well on all your channels.
But just because you’ve set up a program doesn’t mean it’s doing well. To understand whether it’s working or not, and what’s good and what’s a bad loyalty program, you’ll have to analyze its performance.
The best way to monitor your loyalty program performance — install an efficient eCommerce loyalty program app such as Flits. Flits is one of the best loyalty program apps that helps you summarize all customer data in one place and helps you in performance analysis and monitoring the program. Make sure it’s a part of your loyalty program strategy.
Some loyalty program metrics that you should measure:
- Number of sign ups
- Amount of reward points used to make new purchases
- Sign up rate
- Churn rate
- Number of referrals
Here’s the truth – all your customers are different. Your customer pool will have different types of customers with varying spending capacities. Moreover, their loyalty and liking towards your brand might differ, too.
And yet, you treat all your customers the same. Offer the same types of rewards to everyone. Ideally, your most loyal customers should be getting more rewards from you.
If you’re making this mistake, you should create a tier-based points structure in your loyalty program. You can do so by introducing elements of gamification.
For example, The Man Company has set up a tier-based rewards program. The more loyalty points customers earn, the higher they climb and the more benefits they receive. Meanwhile, other customers try to catch up with the higher tiers by spending more or engaging in other activities that earn them points.
Now let’s look at ways to gamify your loyalty program to increase engagement.
- Create a tier-based loyalty program
- Offer different rewards to different tiers
- Combine social media with your program to add gamification elements
- Introduce scratch-to-win tactics
- Use scoreboards and leaderboards to instill a competitive feeling
One of the most active channels for eCommerce brands is their social media pages. That’s where customers connect with brands and other customers.
In fact, 91% of people believe brands can use social media to help people connect with each other.
But, many brands with loyalty programs fail to realize the value of building communities around their loyal customers. And social media is one way they could do so. Brands miss out on combining the two simply because they may not have given it a thought or know the possibilities.
Here are some ways in which you could bring together your social media and loyalty program.
- Talk about your loyalty program on social media
- Create communities on social media for your loyalty program members
- Create contests around your loyalty program on social media
- Run campaigns that combine social media and your program
- Encourage your social followers to join your loyalty program
Setting up a Shopify loyalty program and giving reward points is not enough to sustain your program.
You must treat your loyalty program as a special attraction in your business. So special, that customers should want to stay loyal to your brand forever.
And that kind of a sentiment occurs when you match customers’ expectations with your business goals. For that, you need to constantly monitor your program and optimize it so that it brings the desired ROI.
That’s why you need Flits – the best customer loyalty program app for Shopify stores.