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8 Tips to Reduce Your Loyalty’s Programs Breakage Rate

How to improve loyalty program by reducing breakage rate

Struggling with member engagement? Remember, your customers see value in your program when they “spend” their points. The solution to a high breakage is to make sure that your customers have points to spend, and that they are motivated to spend them.

How to Increase Customer Engagement & Minimize Breakage

Here are eight tips to increase the value your customers get from your loyalty program:

  1. Get creative with rewarding point
  2. Provide a mobile loyalty app
  3. Reward social sharing
  4. Offer a variety of rewards
  5. Surprise and delight customers
  6. Offer Limited-time promotions
  7. Explain how to redeem points
  8. Remind customers about point expiration

1. Get Creative with Rewarding Points

Reward New Members

One of the easiest ways to keep customers engaged is to make it easier for members to earn points. Start with giving new members bonus points just for joining the program and remind them just how close they are to getting their first reward. IHG Hotels and Resorts gives new members 140,000 bonus points for signing up for a new IHG credit card and then reminds them of all the great destinations they stay at when they redeem the points.

Earn Loyalty Points for Joining Program

Introduce New Ways to Earn Points

Hilton recognizes that with the changes in spending and travel during the pandemic, Hilton Honors members want to have alternative ways to stay engaged with the brand and earn rewards. Hilton and American Express announced more ways to earn rewards.

Example fo More Ways to Earn Rewards

2. Provide a Mobile Loyalty App

Make it easy to earn points regardless of the purchase channel.  Provide a mobile app for your program so members can keep track of their points and easily access their account to redeem them.

In Nielsen’s 2017 Global Loyalty-Sentiment Survey, roughly 80% of loyalty-program participants say it is somewhat or very appealing to be able to earn rewards regardless of whether a purchase was made in-store, on a website or on a mobile device (81%) and to choose among several types of rewards (79%).

Ulta Cosmetics has expanded the different ways to shop (online, in-store, curbside) to drive customer loyalty and create more profitable customers who shop and spend more with the beauty retailer. In addition, Ulta Cosmetics is using the Ultamate Rewards Program to provide customers with a more personalized experience through the use of AI and analytics.

Ultamate Rewards Mobile App

Starbucks recognizes that for its members a cup of coffee is much more than a daily routine. A cup of Starbucks represents a bright spot in the day and a link to the familiar. Starbucks responded to the impacts of coronavirus (COVID-19),  by creating a frictionless, contactless payment process using the Starbucks app.  

what loyalty program breakage means

Customers can order and pay ahead of time using the Starbucks App and pick up their orders at the door or in the drive-thru. The mobile app is accessible, and the easiest place for loyalty members to find a store, check hours, order ahead, and have contactless payment with their Starbucks Card. Starbucks ‘ mobile ordering and drive-thru sales had a significant impact on salvaging second-quarter fiscal sales from the impact of COVID. 

Starbucks – Welcoming You Back

3. Reward Social Sharing

In 2019, an estimated 2.95 billion people were using social media worldwide, a number projected to increase to almost 3.43 billion in 2023. Our world is more connected than ever before. The ability for members to share content across channels makes social media capabilities a natural extension of your loyalty program for both advocacy and increasing brand awareness. We recommend rewarding social sharing and customer engagement like referring a friend, supporting a cause, sharing on Facebook, Twitter, Pinterest, fanning your pages, or subscribing to an email.

In Nielsen’s Global Loyalty-Sentiment Survey, 46% of consumers said they would like to earn points or rewards for sharing products and pages on social networks.

find out how to measure customer loyalty

UGG Rewards: UGG’s loyalty program delivers both while adding a layer of community by giving members the opportunity to collect additional points for social sharing and writing reviews. The number of points doesn’t have to be big. The important thing is to keep reminding customers that they have many opportunities to earn them.

Carma Caughlan, Director of Customer Engagement and Loyalty, shared that “UGG Rewards is based on a simple concept – reward our loyal customers for engaging with us regardless of purchase.” 

UGG Rewards Members for Social Sharing

4. Offer a Variety of Rewards

Many times customers don’t redeem points because the amount needed is too big and takes too long for them to accumulate. Remember that one of the goals of your loyalty program is to grow profitable customer relationships. To grow the relationship, you need to offer rewards at a variety of different thresholds to entice customers to earn more points and redeem their points for the rewards they want.

get examples of loyalty program emails

If your business has a loyalty program, the whole reason behind it is to keep customers returning for your goods and services. As a business, your loyalty program is all about recognizing and rewarding your customers to achieve business goals like driving the repeat purchase rate, increasing average order value, and frequency of purchase. For your customers, they get value from the program when they redeem points.

Sephora’s Rewards Bazaar makes it easy for members to exchange their points for a variety of products and one-of-a-kind experiences. New rewards drop every Tuesday and Thursday at 9 AM PST.

  • Point Sample Sets Refreshed Weekly: Members can choose from a variety of 750, 500, 250 and 100-point sample sets, providing access to the most covetable brands like La Mer and Drunk Elephant, that are updated frequently throughout the year, so there is always something new to try in-store and online.
  • Using Your Points to Give Back: Clients can use their points to make a difference. Sephora’s Charity Rewards make it easier to support organizations that provide critical aid in our communities. By redeeming points for a Charity Reward, Sephora will donate the corresponding amount to the Tides Foundation to benefit a featured charity. Charities will be selected on a rotating basis, starting with the National Black Justice Coalition in June and Project Glimmer in July 2020.

Sephora Rewards Bazaar

Sephora members exchange points for products in Rewards 

5. Surprise and Delight Customers

Give members a variety of options to redeem points so they get the most value from participating in your loyalty program. Offer periodic bonus point offers or set up “play to win” events, such as sweepstakes and auctions throughout the year to help reduce breakage rates.

Point Auction Verizon Smart Rewards Points

6. Offer Limited Time Promotions

Chances are you have customers who are eyeing a particular reward in your program but don’t have enough points. Encourage them to spend points through periodic promotions that allow customers to receive rewards at reduced points.

Short Term Loyalty Points Promotion

Citi gave Citi Prestige Card and Citi Premier Cardholders a special offer to use 20 percent fewer points for flights through the Travel Center.

Temporarily reducing the points required for redemption initially cost you money, but it’s a powerful marketing tool you can use to drive member engagement of select customers.

 to improve loyalty program results

7. Explain How to Redeem Points

Often customers mistakenly believe that they can only redeem reward points for a specific type of product or service they have previously purchased. Include a loyalty program explainer page on your website that explains how the program works and what types of rewards are available.

loyalty program explainer page for Expedia

Expedia’s loyalty explainer page outlines in three east steps how its members can redeem there points. Creating a visual explainer page supercharges loyalty program adoption and engagement. It allows existing and potential new members to know exactly what they can expect from the loyalty program.

We recommend you periodically review which rewards have low redemption rates and replace them with more compelling offers. Consider highlighting new rewards through email, mail, and social media.

8. Remind Customers About Point Expiration

One of the most significant factors affecting loyalty program metrics are customers who don’t use their points because they are unaware of expiration dates. Make sure loyalty points don’t expire all at once and send out notices when expiry is imminent.

Example Website Point Reminder

points expiration reminder

Sluggish Loyalty Program?

Let Customer Insight Group show you how to get your member’s hearts pumping again. Call us today at 303.422.9758 to learn how Customer Insight Group’s loyalty consultants can help enhance your loyalty program to boost customer relevance, build loyalty and dominate market share.

A loyalty program audit is highly recommended to assess how well you are doing to support program objectives, identify areas for improvement, and determine how to optimize your program.

Sallie Burnett
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