The Biggest Rewards Program Challenges – And How To Solve Them
A customer rewards program is a smart strategic initiative for any retail business. The impact of a rewards program done right will echo throughout every department of your business including marketing, business operations, customer support, and sales.
Poor implementation, however, will deliver very few if any measurable results to businesses. So we’ve written this article to help you avoid all the biggest slip-ups when it comes to rewards program implementation. In this post we’ll detail the biggest challenges to launching a loyalty program that adds consistent value over the long-term.
Differentiating from the competition
Loyalty programs are increasingly popular in South Africa, and this can make it harder for a business to make its customer loyalty program stand out from the competition. Not only do you have to ignite loyalty, you have to keep it fuelled so customers stick with the program.
You have to develop something that’s unique to your brand and relevant to your customer base. This may require some experimentation, like surprising members with a free gift on their birthday or offering a type of special unique to your brand.
At the very least, you need to make sure that your rewards program offers customers benefits that are relevant to their buying habits. This is easy with loyalty software like The Loyalty Box.
Financial liability for accrued points
When a customer earns points with monetary value, the company’s financial liability for those points occurs at the time of reward, not the time of redemption. With some businesses, this can limit flexibility with regard to their customer loyalty program. Some companies choose to control points liability by rewarding actions that are not purchase-based, such as liking a post on Facebook.
This causes the financial liability of the rewards to occur when the reward is redeemed, rather than when it is issued, so companies can determine in advance exactly how much it’s going to spend on a particular loyalty campaign. With The Loyalty Box software, you can keep all financial risks out of the way by issuing points in exchange for purchases.
Return on investment
Calculating ROI for a customer rewards program isn’t always straightforward. Typically you have to evaluate several metrics individually and see what the whole adds up to. To track ROI on your loyalty program, you should look at:
• Total visits – which can be tracked by allowing customers to automatically “check in” at a business with their smartphone whether they make a purchase or not. Customers who have not been back in a while can be targeted with an exclusive offer to entice them to come back.
• Percentage of new vs. return customers – which varies with the maturity of your customer rewards program. Typically a 40% repeat customer base is considered good.
• Amount of “churn” – which refers to the proportion of customers who stop buying from you during defined period. It may indicate customer dissatisfaction, or better offers from competitors.
Calculating ROI on customer rewards programs requires evaluating several factors.
Fragmentation of the sign-up process
You have to make your sign-up process as quick and streamlined as possible to get participation. On the same note your staff have to be able to clearly communicate the benefits of your program in one short sentence.
Customers don’t want to have to go through several steps (online or off) to become part of a customer rewards program. Allowing customers to sign up for your program online or via SMS works incredibly well but having well designed leaflets that are clear and concise is good enough.
Lack of instant gratification
Customers like a certain amount of instant gratification, even though most customer rewards programs reward members for purchases. When you offer a reward to members for non-purchase behaviour, like referring friends, consuming online content, or sharing something on social media, you help strengthen brand affinity.
Much brand loyalty occurs outside the actual purchase process, and there are countless ways to reward non-purchase actions that indicate growing brand loyalty.
Aside from that keeping your customers in the know about how many points they have, how to check their points, and how to redeem them, is nothing short of vital. Always make sure your customers know how to use your loyalty program and get the most out of it.
Keeping your staff onboard
One of the least understood aspects of a loyalty program is the responsibility on the companies front line staff. Nothing kills a rewards program as quickly as cashiers getting lazy and forgetting to ask every single customer whether they have a loyalty card at their point of purchase.
Depending on your business type this may require spot checks or simply a regular training if you have a high staff turnover. Either way integrating training into the regular responsibilities of your managers is vital to the long-term success of a loyalty program.
This article contains some more in-depth advice on staff training.
A great customer rewards program helps businesses predict and manage costs while allowing customers flexibility in earning and redeeming rewards. When you can do these things, you develop a feedback loop of loyalty and brand affinity and can count on a greater ROI for your customer rewards program.
At The Loyalty Box, we offer exciting, flexible customer rewards programs to retail franchises all over the globe. Our programs are easy to implement and are tailor-made for each client and integrate with all major point-of-sale systems. We invite you to contact The Loyalty Box for more information and would be delighted to answer your questions on how to implement a customer rewards program that works.