Why Customer Loyalty Will Fall When You Do This?

Inadequate Rewards

The fastest way to lose customer loyalty is by offering inadequate rewards with your loyalty programs. Your customers need to have a reason to join your program. They need to receive something valuable in return, which will show them that you understand their needs and care about them.

For some customers, that can be getting a dollar-off coupon every once in a while. For others, it can be receiving free gifts. For others still, it can be getting access to some of your new products and services before they become available to the general public.

It’s up to you to find out the adequate rewards for your most loyal customers. You need to identify your customer needs and wants, and use them to your advantage.

The goal of your loyalty program shouldn’t be to boost sales or increase cart size. The goal should be to meet your customers’ needs and give them an incentive to join your program.

If you fail to meet customer expectations or if you leave them disappointed, not only will your loyalty program become pointless, but your company will lose some of its most valuable customers. Your customer loyalty will likely fall when you offer inadequate rewards that are virtually useless to most customers.

Do This Instead

Before you can start to maintain customer loyalty, you need to get to know what actually drives customer loyalty.

• Interview your most loyal customers
• Try different rewards for different segments
• Use digital channels to map out customer behavior

Failing to Reward Correct Behavior

Another instance when customer loyalty will likely fall is when you fail to reward the correct behavior. Since 65% of your business, on average, comes from your return customers, you’ll want to ensure that you deliver on your promises when offering rewards, and you’ll want to ensure that you’re rewarding loyalty, not disloyalty.

Too many businesses focus on offering discounts to first-time buyers or bribing new audiences with special sales, first order promo codes, and more. Although this can be inviting to new customers, it only shows your return customers that they’re better off going to your competitors. They’ll likely get welcome bonuses and new customer rewards there, so they’ll end up being rewarded for their disloyalty.

The easy way to fix this is by ensuring loyal customers get better treatment. It doesn’t mean you should stop incentivizing new customers or cease all your lead generation efforts. It merely means that your loyal customers will receive rewards for staying with you. The longer a customer is with you, the more value they get from you, especially when compared to newcomers.

Focus on Increasing Customer Retention Rate

Building trust is a surefire way to keep your customer in the long run. Never forget to reward your early adapters.

A great example of such strategy is what subscription businesses often do. Their monthly rate is higher than the if you make one-off payment once a year. Why? They want to maximize their annual earnings by rewarding most loyal customers by giving them a lower price.

One of the most innovative customer loyalty strategies was introduced by HBO Max when they first launched their new streaming service.

Here’s a breakdown:

• The service was offered for nearly half the price, at €4.49 a month (normally €8.99/month) for a limited time
• The offer will last for life if the user doesn’t unsubscribe
• If the subscription is cancelled, the price will be €8.99/month

Making the Program Overly Complex

Going through hoops to join your loyalty program, earn rewards points, or redeem them will only discourage your most loyal customers. For an effective program that successfully retains customers and ensures their loyalty, you need to have clear and concise rules that don’t come with a side of headache.

There’s nothing worse for your customers than going through form after form, filling in the required information, following confusing pointers, and having to use a calculator to find out exactly how much their rewards might be worth.

Simplify everything

Make it crystal clear how the rewards system works and how your customers can join it. Create a separate page on your website where the rewards are explained, and interested customers can contact you if they have any questions.

Always offer the rewards in a timely manner after a customer has reached the set milestone!

The “Everybody Wins” Approach

With the “everybody wins” approach, no one truly wins, and you most definitely lose. If you’re treating a customer who’s been with you for the past 10 years in the same way you do a prospect who’s only coming to your store to window shop, your loyal customer will feel under appreciated.

How would you feel if a brand you love gave you the same rewards for making 20 purchases a month as they do to your acquaintance who spent $2.00 at their store 3 years ago? Probably not great. You’d see no value in being their loyal customer, and you’d look for their competitors who show their appreciation a bit more.

One Way to Avoid This

The easiest way to provide incentives to all customers while still showing your appreciation for all of them is by developing a tiered VIP system.

In this system,

• Newcomers could enjoy a special discount on their first order.
• Return customers could receive their unique discount codes with greater value.
• Loyal customers could get gifts, prizes, or exclusive offers.

It’s a simple system that ensures everyone’s satisfaction while offering a personalization level that your most loyal customers will appreciate. Show your loyal customers that they’re your top priority.

Not Enough Program Promotion

Customer loyalty will likely fall if they forget about your brand and your loyalty program. People wouldn’t care if 74% of brands they used vanished simply because those brands are of no relevance. They are not memorable. There are plenty of competitors who offer the same products and services at similar prices, so it’s of no consequence if a single brand vanishes.

To make your customers care, you need to remind them of the value you offer through your rewards programs and incentives. And you need to remind them to use your rewards programs to their advantage. Focus on program promotion, send reminders, and make it easy for your customers to see the rewards they’ve already earned and the rewards they can expect by returning to your brand.

Poor Budgeting

Finally, your customer loyalty will likely fall when you have poor budgeting – aka when you don’t know the ROI you’re getting. If you have no idea whether your loyalty program is paying off, you have no way of knowing whether you’re meeting customer demands.

An underperforming program means that your customers don’t find value in it. They don’t use and collect their rewards because they’re not relevant to them. However, it can also mean that the rewards are so great that your company is losing money on them.

You need to find the right balance between valuable rewards and turning a profit. Keep a close eye on your program’s performance, and catch and fix mistakes or problems before they get out of hand.

Conclusion

Unfortunately, many things could cause your customer loyalty to decrease.

That’s why you need to constantly:

• monitor your performance,
• collect customer feedback, and
• update your programs as you go

The better your rewards programs are, the more customer loyalty you can enjoy.