THE CLARUS Blog

Why Consumers Say No to Loyalty Programs

Earning customer loyalty was hard before COVID-19.

Now, it’s even harder.

In fact, nearly two-thirds of consumers say their loyalty is more difficult for retailers to maintain than ever before.

There are so many loyalty programs out there (90% of companies offer either a loyalty or customer engagement program).

But the overarching challenge is many of these programs fail to regularly engage their members if they even get someone to sign up. Consider that 54% of loyalty memberships are inactive.

So, why do consumers say no to your loyalty program?

 

Many Loyalty Programs Are Too Confusing: Simplify It

With seemingly limitless options out there for consumers, if someone wants to join your loyalty program, but encounters a confusing and complex registration process, they will leave.

If you get your loyalty program registration process wrong, you’ll be fighting an uphill battle.

If a consumer can’t sign up for your loyalty program in a brief amount of time, you will lose many potential members.

It’s quite simple: Simplify your registration process as much as possible.

No one wants to fill out complex and confusing forms to join your loyalty program. Or be sent to other pages to continue the signup process.

Consider that $98 billion per year is left on the table by companies who fail to provide simple experiences for their customers.

The other issue is a benefits structure that is easy to understand.

This is true especially of some tiered programs out there that require a mini spreadsheet to list the benefits that correspond with various spend levels.

 

Your Loyalty Program Doesn’t Offer Enough Value

Seventy percent of consumers would join a premium loyalty program if their favorite retailer offered one and the benefits were valuable.

It’s quite simple: If your program offers true value, consumers will join it. If not, they won’t.

With so many loyalty program cards burning holes in consumers’ wallets, you must differentiate your brand and position your program through value.

Value is what attracts and retains your program members.

Many traditional loyalty programs require members to spend hundreds of dollars before they ever see a reward. That doesn’t cut it in today’s world of instant gratification.

While consumers have heightened expectations, especially since the pandemic began, your brand should design a compelling loyalty program filled with benefits that deliver instant gratification.

Customers with an emotional relationship with a brand have a 306% higher lifetime value and will recommend your brand at a rate of 71%, compared to the average rate of 45%.

According to our 2020 Premium Loyalty Data Study, 60% of consumers said instant benefits such as free shipping would motivate them to join a premium loyalty program.

While some retailers offer faster benefits, many of them still require customers to wait for rewards.

Customers want to know that the business values them. That value is shown through your loyalty program, which should regularly engage your members and offer value.

Consider 94% of premium loyalty members shop at that program’s retailer at least once a month.

And 88% of consumers who are satisfied with the special benefits offered by a retailer’s premium loyalty program will likely choose that retailer over a competitor that is offering a lower price.

Also, nearly 90% of consumers would recommend a retailer to family or friends if the retailer’s premium loyalty program offers valuable benefits.

Consumers want great value and a great experience. When a company gives them an experience worth talking about, they will share it with others and come back to experience it for themselves again.

Here’s a tip for your loyalty program signup process (if you don’t do this already) that personalizes the experience and builds excitement, anticipation, and engagement.

Post signage around the store explaining your loyalty program with a simple instant benefits structure and have a QR code so that consumers can scan and sign up right from their phones.

And you can offer a premium loyalty program or tier instead of a traditional tiered program that has different status levels based on spend.

In a premium loyalty program, you can give your customers the option to pay a membership in exchange for enhanced benefits that they could use all the time. This simplifies the loyalty process and erases the need for delayed gratification.

 

Your Loyalty Program Doesn’t Differentiate

The best way to show you how to truly differentiate your loyalty program is through an example.

Let’s look at the RH Membership Program that offers Restoration Hardware customers discounts and exclusive services.

It’s simple, straightforward, and full of value.

For $100 annually, members enjoy 25% savings on all regularly priced items all the time. They also save an additional 20% on sale items.

Beyond those transactional benefits, membership includes complimentary interior design services and 1-on-1 consultations with members of the company’s experienced design team.

Not every brand is set up like Restoration Hardware, but most can combine transactional and experiential benefits to create a differentiated loyalty program.

Learn more about why the RH Membership Program has been a huge success.

Consumers want to experience and identify with your brand. Give them an engaging, valuable loyalty program.

Learn what your unique customers value most.

 

Make Consumers Say Yes to Your Loyalty Program

Now that you know what to avoid in a loyalty program (too long to reward, little value, lack of excitement, doesn’t differentiate), go out there and create something that your members will engage with regularly and tell their family and friends about.

Retaining loyalty program members for the long term is the goal.

Address customer pain points and offer valuable, instant benefits, both transactional and experiential. This creates a comprehensive feel to your program and draws customers to it.

Make your members feel special and make your program benefits desirable.

Prioritize relevant communication with members and consider including a charitable component in your program. True program value will differentiate your brand and attract more members.

Since the pandemic, everything has been flipped upside down and earning consumer trust is crucial.

Make your loyalty program the main reason why consumers gravitate toward you.

 

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