[VIDEO] Why do some loyalty programmes fail?

Learn more about why many loyalty programmes fail, what the secrets of successful brands are and how to emulate them, by watching Ralph Browning's presentation at IMRG Customer Connect 2022.

Loyalty schemes present a great opportunity to gather personal details about customers such as email address, telephone number, and birthdays. If used strategically by organisations, loyalty programmes can be the route to more personalised communication with customers, as well as longer-term, higher-value relationships.

Why is this important right now?

Retailers, brands, and other consumer-facing organisations should always be looking at ways to strengthen relationships with their audience. Engaged and happy customers result in more opportunities to grow revenue. And due to the phasing out of online third-party cookies, it is increasingly important to have access to first-party data for marketing purposes.

Deeper dive

Ralph Browning, Business Development Director at Epsilon, recently explained at IMRG Customer Connect some organisations fail to achieve the desired results from their loyalty programmes. He said there are a plethora of examples where brands lack creativity, and fail to build on the initial success of signing up customers to a scheme.

Ralph said: “If people are joining a programme and not really understanding what it's all about or are thinking it’s very same-y, then it's probably because it is. It's just an off-the-shelf kind of solution, which is a sort of me-too programme – there's no innovation, there's no unique, exciting features about it.”

Customers like signing up to loyalty schemes and are willing to provide data to brands in return for rewards, but can regularly find themselves underwhelmed and confused by these programmes due to lack of proactivity.

Solving the loyalty programme challenge

Ralph explained that any brand should be able to make a success of a loyalty programme given the right strategy. It starts with being highly creative in the development stage, and making sure the concept is innovative and interesting, rather than repeating what has been done before.

Brands – particularly those not expecting regular spending cycles from their customers – should use engagement tactics such as auctions, sweepstakes and surveys. They should use the information they know about customers to trigger additional spending, and ensure loyalty programme points issued are turned into incremental sales opportunities.

Personalisation and making rewards obtainable are vital ingredients of loyalty programmes, according to Ralph, who advised continual programme development.

Commenting on how brands failing with loyalty schemes could turn their fortunes around, Ralph said: “They really should have a 100-day strategy to find out a little bit more about [members], with data creep, in terms of trying to find out more and be able to personalise.”

The bottom line

Ralph explained that brands and retailers such as The North Face, Kellogg’s, Walgreens, Estee Lauder, Sephora, and P&G each have successful loyalty programmes. A common thread running through each of these companies’ strategies is making loyalty programme decisions to enhance the brand and customer experience.

Ralph also highlighted a future direction of loyalty schemes which use “intelligent marketing communications from behavioural economics”. Yet to launch, the idea behind one brand’s loyalty programme following this model is to prompt FOMO. One concept related to the scheme is to ask members what reward they'd like to receive and – based on their spending pattern – predictions can be made when that reward will be secured.

Ralph said it is an example of responding to members saying "I'm just collecting points, so what?" by owning the conversation with: "This is yours, you will have this, as long as you carry on this behaviour”. It represents a creative way of encouraging repeat spend.