5 Common Mistakes to Avoid When Building a Customer Loyalty Program

By WriterEvan, Monday, September 17, 2012

starbucks card 5 Common Mistakes to Avoid When Building a Customer Loyalty ProgramMany businesses find at some point that it is in their best interest to offer their loyal customers incentive to keep coming back, spending money, and even acting as brand ambassadors by recommending goods and services to family and friends. Some businesses make simple punch cards for purchases that eventually add up to freebies or discounts. Others have straight-up discount cards for their members or offer them special promotions and sale days. Some provide in-store extras like WiFi for guests while others will seat or serve regulars first. And still others have “points” or “mileage” rewards that can add up to major savings, upgrades, or free stuff. But not all customer loyalty programs get it right. Here are a few stumbling blocks that you’ll want to avoid.

  1. Annual fees. Paying to get free stuff is not only antithetical to the whole concept of rewards; it’s also a real turn-off to customers that want to feel like their patronage and consumer dollars are appreciated. You’re probably better off having no customer loyalty program than creating one that people have to pay for.
  2. Outlandish qualifications. You’re a business and you need to make money to survive; we get it! But a program that has standards so high that only a handful of customers will ever see rewards is sort of like a wolf in sheep’s clothing. In other words, it’s a pretty lie. If you really can’t afford to offer freebies or discounts, find other ways to show your appreciation for patronage. But don’t dangle the carrot and then keep it out of reach. That’s a good way to confuse and frustrate consumers to the point that they give up on your brand altogether.
  3. Worthless rewards. When people sign up for a rewards program they expect something of value, like a free cup of coffee after they pay for ten, or free upgrades (when available) for using a specific airline, hotel chain, or car rental agency. Even a 10% discount on in-store or online purchases is nice. These all provide added value to the customer experience and leave users feeling special. But offering unrelated paraphernalia or promotional items that they don’t want and can’t use is nothing more than a cheap trick that savvy consumers will see right through.
  4. Lack of competition. You’re not the only company offering a certain type of goods or services, and you’re probably not the only one offering a rewards program, either. This means that you must be aware of what competitors are up to if you want to provide better or more appealing rewards to loyal customers. Real-world and cheap search engine optimization efforts will only get you so far and then you need to deliver the goods, so to speak. So if you’re working on establishing a rewards program for loyal patrons, make sure it’s not only appealing, but that it also trumps the competition.
  5. Fraud (or tricky fine print). Your customers shouldn’t have to read legalese in order to take advantage of your benefits. And they definitely shouldn’t have to argue with minimum-wage register-jockeys (that have no power to help them anyway) in order to get the rewards they deserve. Keep in mind that the whole point of a customer loyalty program is to reward shoppers who frequent your establishment and help to keep you in business. Making their life more difficult or leading them to feel tricked in some way is a great strategy for losing the patrons that have been the most generous to you.
 5 Common Mistakes to Avoid When Building a Customer Loyalty Program

The Article Scholar:

Evan Fischer is a freelance writer and part-time student at California Lutheran University in Thousand Oaks, California.

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