How is your loyalty program doing these days? If it isn’t thriving, the four issues discussed in this article could be at fault. They’re among the most common problems that afflict loyalty programs and torpedo success in customer value marketing.
Issue 1: Breaking Badly
Breakage occurs when customers earn points but never redeem them for rewards. In some instances, breakage is good and can reduce program costs and liability. But if breakage gets out of control, you risk alienating your customers rather than building loyalty.
Good breakage occurs when those members who passively participate in your program do not receive rewards. Passive members don’t work the system; they may not even realize they’re members. If they get a reward, it’s purely by accident. They’re not being induced by the program to make incremental changes in their spending. So, it’s OK by you if they don’t redeem that reward.
Bad breakage happens when customers get so frustrated with your program that they’d rather lose out on a reward than jump through your hoops. It can also occur when your rewards are too small or so irrelevant that they don’t motivate the members to visit your store or even your website to redeem.
In short, bad breakage is a sign that your program isn’t actually building loyalty—and could be destroying it.
Focus groups and other qualitative research among your program members can help you identify the type of most prevalent breakage. If the needle points toward bad, then it’s time to step back and re-examine—and probably refresh—your loyalty program before it reaches its own breaking point.
But you need to be careful here…