The retail marketplace is more crowded than ever. In addition to traditional brick-and-mortar outlets, consumers have the option to purchase goods online. As a result, companies are continually working to hold onto their customer bases given the plethora of shopping options that are available to them.
One strategy many retailers employ is creating customer loyalty programs. This is essentially an initiative that offers consumers discounts on purchases or other perks that will encourage them to come back and do more business.
However, many consumers are less than satisfied with these kinds of programs and take to social media to voice their displeasure.
The Marketing Science Institute wrote that annually, 1.8 billion people actively participate in a customer loyalty program, with the average household signed up for as many as 14 different ones. In addition, brands invest $1.2 billion in developing and implementing these initiatives every year.
However, the level of unhappiness with these programs voiced by consumers is not only staggering, but an overwhelming cause for concern among retailers.
According to eMarketer, citing a study conducted by Capgemini, 93 percent of customer loyalty program discussions taking place on social platforms such as Facebook and Twitter are negative. Capgemini's research found 17 percent of complaints were rooted in a general lack of satisfaction with the customer service provided by the loyalty program.
Another 33 percent of people participating in the Capgemini poll stated that they were unhappy that rewards programs don't incorporate a more seamless multichannel experience. Given that consumers have the option to make purchases online or in stores, many loyalty programs only reward the latter. This means that customers can't redeem their perks when buying goods on the Internet.
In an overview of more than 160 consumer loyalty programs, Capgemini found that just 24 percent of these initiatives gave customers a mobile application redemption option. With mobile commerce growing, not offering this to consumers is essentially counterproductive to the overall success of the loyalty program.
Lastly, an overwhelming majority of dissatisfaction was rooted in the fact that many shoppers find that rewards offered by their favorite retailers are irrelevant to their needs and have no value. For example, if a grocery store chain offered a frequent shopper a 25 percent discount on dog food, it would be of no value if the individual owns a cat.
When consumers vent their frustrations to their social networks, this negative sentiment can spread quickly and do a great deal of damage to the company's reputation. There are ways to guard against this, however.
Here is a list of suggestions that can strengthen loyalty programs and make consumers happy:
1. Establish the overarching vision for the program
CRM Trends wrote that the reason consumer loyalty programs are dissatisfying is because they aren't created in accordance with the overall brand vision. The way the system is positioned affects communication strategies, as well as the customer's perception of the company. Essentially, it makes no sense to launch this kind of initiative simply for the sake of doing so. It has to have meaningful value for participants and brands must make a concerted effort to present this proposition to their customer base.
2. Give points for simple actions
Many loyalty programs require consumers to amass a certain number of reward points before they can be redeemed for something of value. This can quickly lead to frustration, particularly if a brand makes points difficult to earn. Sweet Tooth suggested that retailers provide these perks almost immediately after consumers sign up for the program. For example, an individual should be presented an award just for signing up or even referring a friend. The easier it is to build equity, the more successful the program will be. It also helps when brands work with an efficient prize issuing service that will ensure that consumers can redeem perks quickly and easily.
3. Always test new initiatives before launch
One of the best way to gauge the success of a customer loyalty program is to offer certain perks to a small sampling of consumers to see if this particular perk elicits a favorable response, CRM Trends wrote. Doing so will help a company better map out its offerings, ensuring that they will be received favorably when deployed to the entire customer base.
4. Address concerns immediately
When users go online to complain about a rewards program, brands need to be proactive in their approach. Issues need to be acknowledged and addressed immediately, especially on social media. It's important for retailers to remember that bad news travels fast. A negative reputation developed online can have far-reaching and damaging effects. This is why it is important to keep these issues contained as much as possible. However, should consumers have any questions or concerns related to their overall experience, acting fast and letting people know that their vocies are not only being heard, but their feedback is valuable, is the most viable solution. Read More