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New Survey: Is Your Loyalty Program Counter-Productive?

You’re 8 years old again.

The guy on TV just said you can get a FREE Captain Spaceman Decoder Ring, simply by sending in 5 boxtops


You eat more SugarBunch in the next two weeks than you can ever stand … and your Mom helps you mail away the coupons … and you wait ….

And wait …

And wait.

Two and a half months later, you get a skinny little envelope in the mail, with a cheesy picture of a “ring” printed on a crummy piece of cheap cardboard.

And it tells you to substitute “A” for “B” and “B” for “C” to read secret messages … that you can get by mailing in only 5 more boxtops of SugarBunch cereal.

It’s likely you’ll “opt out” of this cheeseball loyalty program.

It’s likely you’ll never eat another bowl of SugarBunch.

And it’s also likely you’ll tell all your friends, and that the experience will leave a bad taste in your mouth for, oh, the next 10 years or so (though it might actually bring a nostalgic smile to your face 20 or 30 years later).

Update that scenario to reflect on your own, adult experience with an airline or retailer – or some Wisconsin firm that actually DOES have a cheese ball loyalty program (which are REALLY tasty, too!) …

A new survey from ACI Worldwide indicates that almost half of us have had a bad experience with a loyalty program. Further, more than 8 in 10 of us haven’t a clue how the program works, and haven’t heard from the company since they signed up for it.

Sound like a prescription for failure? For actually driving customers away from your product?

It shouldn’t be too difficult to carve out simple and realistic goals for your loyalty program … but it is. It’s tricky. That’s why you need to think it through with experts who’ve done it before: The pitfalls of negotiating loyalty paths can leave you digging out of the dirt for months – even years.

The goal of any loyalty program is to drive customer engagement, but the survey shows that marketers are neglecting a valuable mechanism to engage customers with relevant offers, communicate updates, and collect rich feedback.

Consider some of what ACI has learned through its surveying, conducted by Wakefield Research:

  • More than 2 in 5 consumers have had a negative experience with a customer loyalty program
  • Three out of four Americans are members of at least one retail loyalty card program, but 85% say they haven’t heard from their loyalty program since the day they signed up – and 81% say they don’t even know the benefits of the program or how and when they will receive rewards.
  • 62% join retail loyalty programs so they can get discounts on the things they buy most, yet only about 36% received a reward or promotion that made them come back to the store again
  • 27% of consumers complain they have received a reward or promotion for something they would never buy.
  • Only 27% of Americans have received a loyalty program reward or promotion that made them feel like they were valued as a customer.
  • 52% prefer a single card that can hold all their memberships, versus a consolidated key fob or mobile application.

Develop a strong, easy-to-understand program, follow through on your promises, and have an open channel of communications with your customers. You’ll find that you stand out from the crowd, simply because the crowd, apparently, is not making the customer feel appreciated, valued, and satisfied.

As loyalty programs become ubiquitous, customers are gravitating toward those who are able to differentiate one shopper from another and offer a mix of personal recognition and reciprocity with hard benefits (discounts, rewards or member-only offers). In addition, staying on top of the latest technology, including social-networking preferences, can serve as a tool to facilitate customer engagement and advocacy.

Sallie Burnett
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