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How to Overcome The Loyalty Program Participation Slump
Denver, CO, August, 2018 — Customer Insight Group, an industry leader in customer rewards programs and loyalty programs, shares how to solve marketers biggest problems with turning passive members into engaged, profitable, loyal customers.
50% of Loyalty Programs Member Are Inactive
A 2018 study found that U.S. consumers belong to an average of more than 13 loyalty programs, but they are only active in 50 percent of the programs that they enroll. Active participation is generally defined as a member earning a reward and redeeming a reward within the calendar year. That means — half of the customers enrolled in loyalty programs are just names in a database with unrealized potential.
Marketers have the opportunity to make effective use of customer insight to truly engage members with their brand and to transform passive members into profitable loyal customers. “The two most critical factors for loyalty program participation are if the program benefits are easy to understand and that the benefits are relevant,” said Sallie Burnett, president & CEO of Customer Insight Group, Inc.
Make It Easy Understand
When a customer thinks about enrolling in a loyalty program, they ask one simple question, “What’s in it for me?” They know companies get valuable customer data and they want to know how they will use it to recognize, reward and communicate with them. So make it easy for them to understand the program benefits. What are the benefits they will receive immediately upon enrollment and what additional benefits can they earn over time. If the company has a rewards program, spell out how many points are earned per dollar spent and how many of those points are needed to earn a reward.
Timely, Relevant Rewards
We live in the age of immediate gratification. Therefore, members don’t want to wait to get rewarded for their actions (enrolling, referring, liking/following, sales). If a company has a points program, make the points system reasonable and proportionate. Offer a variety of relevant rewards. Some members may be interested in status-oriented and other nonmonetary loyalty rewards, while others may want to earn cash back or travel incentives. Make it easy for the member to see their progress. Showing their point totals on receipts, on the website and/or mobile app is a good way to let members know how close they are to earning the rewards that they desire. Use personal recognition and rewards to create aspirational spending and passionate brand loyalists.
Measure Customer Loyalty
Build in regular assessment periods and adjust the loyalty program based on the findings. Customer retention rates, lifetime value, repeat purchase rate and net promoter scores are important metrics to measure the overall “health” of a loyalty program. Active participation in the program can best be measured (month, quarterly and annually) by looking at:
- Percent of members earning points
- Percent of points redeemed for rewards
- Percent of members earning rewards
- Breakage rate
These four metrics help marketers to understand what percent of members are actively earning and redeeming. If marketers see a gap in the number of people earning rewards and not redeeming, marketers can conclude that members may not see value in the rewards earned. On the other hand, if each quarter the majority of members are not earning enough points to qualify for a reward, the qualification levels may be too high and may have a negative impact on that customer’s perception of the program and brand.
“We’ve found that the top two reasons consumers lose interest in a loyalty program are that the rewards were not relevant and it was too difficult to earn rewards.
As with any relationship, it’s a two-way street — a give-and-take relationship. A customer spends money, provides personal data and becomes a potential advocate of the organization. The company rewards the customer with recognition; using the information to better meet the customer’s needs and ultimately cements their loyalty, said Burnett.
ABOUT CUSTOMER INSIGHT GROUP, INC.
Customer insight Group is a leading strategic marketing consulting firm that helps companies engage, retain and grow profitable customers relationships. We help companies assess and improve customer strategy to achieve measurable business objectives. We provide loyalty program audits, social media customer engagement programs and innovative customer rewards programs.