How not to run a Reward Program

For ensuring regular sales across product and service categories, marketers regularly devise new online and offline strategies for engaging their customers to buy online or increase outlet visits. Running a loyalty rewards program is one such popular activity, where financial institutions, retail outlets, B2B and B2C companies reward their customers with actual cash back or loyalty points every time they spend at any outlet participating in the respective loyalty reward program.

However, there are some precautions which must be taken while devising and running a loyalty reward program, for ensuring uninterrupted success as well as sustained customer delight.

Running a one-size-fits-all program

The concept of loyalty differs from customer to customer. Assuming that all customers will expect the same response for their continued patronage is a mistake made by many loyalty reward companies. Price sensitive customers may want discounts, whereas other customers might want relevant special offers in lieu of their spending.

Setting reward levels without any customer insight

Many retailers pro-actively set the reward levels of their programs without taking a feedback for the same from their existing and potential customers. They should take regular feedback from customers on the actual efficacy of the reward program and accordingly incorporate the same in the program. This will ensure that the reward program runs in line with customer expectations.

Ensuring that the earned reward points are redeemed

Earning points is the first step in a loyalty reward program. Marketers must create regular opportunities where their customers can redeem their earned points and earn fresh points. This will ensure continuous spending which is the real objective of running a loyalty reward program. If customers do not see any benefit of being a part of program, they will not be inclined to use it regularly.

A long-term customer engagement strategy is a must

Loyalty is not created just by rewarding a few rupees in cash back or some loyalty points. Marketers should work out a long-term strategy for increasing customer monetization by devising unique earning and redemption opportunities, instead for aiming for one-off transactions from disinterested customers.

Flooding the program members with irrelevant offers

Marketers should not ignore the basic rules of spam communication by sending every offer to every customer.  Only relevant latest offers should be sent to members who have shared their category preferences for which they would like to receive offers.

For attracting new age customers, mobile is a must

Given the huge penetration of mobile phones in the customer ecosystem, marketers who offer only in-store sign-up and offline redemption opportunities will find it extremely challenging to successfully run their reward program. Marketers should ensure that, along with smart phones, their loyalty reward program runs equally well on feature phones. Customers should be able to use their mobile phones to check their points balance, see all offers from participating outlets and confirm credit of reward points after successful completion of the transaction. 

Continuously monitoring and tweaking the program

When marketers start a program and then leave the program to its own ‘fate’, they are surely headed for disaster. Launching a loyalty program is just the first step; it’s important to consistently monitor the program flow and create new earning and redemption opportunities for the program members. Continuously ‘feeding’ the loyalty program will keep the customers profitably engaged reap rich dividend.