Loyalty programs are on the decline in consumers’ minds due to the overwhelming proliferation of the programs from every type of retailer. A few bad apples have poisoned the lot because they’ve neglected to address their problems, and instead attempted to cover up with loyalty programs. If your goals for a loyalty program are based on solving problems better addressed other ways, you are set on a course for disaster. Here is a short list of what a loyalty program can’t fix.
1. Loyalty programs measure loyalty, they don’t create it.
If you think your program is going to be the sales boost your company needs, you’re wrong. Loyalty programs measure and reward loyalty, they don’t create it. If you don’t have loyal customers now, a program is not going to bring about a change of heart. You need to create products and services that customers love, then loyalty will come.
2. Addressing operational issues with marketing.
If your customer service is failing, and your store is a mess, applying any kind of marketing, or loyalty program incentive is not going to work. You can’t coupon your way out of a bad business model. A big poster of your core values on the wall is nice, but when your employees are using foul language and openly talking about customers negatively, your values leave much to be desired. Focus on a execution of your product or service first.
3. Your customers don’t want to come back.
Read item two again, and address what issues your customers must have with your service or product. It’s rarely opportunity or cost that are barriers to repurchase. It’s something more institutional than market forces. I like to think about the gas station model. Gas stations are many times located very close to one another, equally accessible. And for most consumers, the product is completely the same in price and quality. So why does one have more cars than the other, or why do you prefer one over the other? What is it about that station that drives more sales and return visitors? 9 times out of 10, they have offered you something more than just the product of gas, and the experience extends past the pump. Explore what it is that makes your customer want to return to your business.
Loyalty programs are great, but they are by no means a magic solution to your business problems. A well designed loyalty program can create revenue and engage customers if it is done correctly. Be sure you are set operationally before you jump into the loyalty game.