Loyalty Programs

tina5giga By tina5giga, 10th Mar 2014 | Follow this author | RSS Feed
Posted in Wikinut>Business>Sales & Marketing

Business use loyalty programs to lock customers to their brand. However, these programs fail to work most of the time. This article tries to explain why loyalty programs usually fail to work.

Loyalty Program not Working? Here’s Why

Loyalty programs have taken over our lives; we see them everywhere. Not in our wallets, not in our mobile gadgets. However, do they really work? In most cases, a customer’s loyalty has nothing to do with the loyalty cards they have. Consumers shop in stores not due to their loyalty, but because the store is close to their offices, sell their favorite brand of shavers, sell products at affordable costs or just satisfy their needs.

Customers get loyalty cards from their favorite stores that they like to frequent and use the cards for the same reasons. Loyalty cards are a true reflection of customers’ preferences for a brand at any particular time and their past buying behaviors. Most companies assume that the customers who purchase from their brand and own their loyalty cards are actually loyal to them. They think that more purchases from a specific client means loyalty. But, they are very wrong!

They fail to realize that the changes in a customer’s shopping trends or behavior have nothing to do with their loyalty. Customers can be loyal to brands without having their loyalty cards. For instance, a customer can choose to do their freelance jobs from a single coffee shop not because they make great coffee or are loyal to the brand, but because the cafe has free wireless internet. Another reason these programs fail to work is because they do not motivate customers to return for more services or products from the specific brand.

Businesses spend billions of dollars per annum on loyalty programs because they believe it is easier and cheaper to retain a customer than draw a new one. This is not true because most customers do not care about the loyalty cards that are stuffed up in their wallets. They care about the products they purchase and the experience they have when they visit the stores or brands.

The emergence of mobile wallet platforms is not a solution for this problem either. The platform will help reduce the size of wallets, but the problem will remain. Issuing of loyalty cards will remain a strategy used by brands as an attempt to differentiate themselves and retain clients. Businesses need to be more innovative to lure and retain their clients.

They should design loyalty programs to improve user experience by elevating their services. True customer loyalty and retention can only be achieved if the loyalty programs integrate improved user experience. With that, businesses will motivate their customers and see many of them return to their stores.

Tags

Consumer Loyalty, Customer Loyalty, Loyalty, Loyalty Programs, Why Loyalty Programs Dont Work

Meet the author

author avatar tina5giga
I am a freelance writer who is very passionate about writing. I have also published the book 'FITNESS AND COGNITIVE BEHAVIORAL THERAPY: THE KEY TO LOVING YOUR BODY' on Amazon's Kindle platform.

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Comments

author avatar Clarence Schreiber
11th Mar 2014 (#)

I agree with your article. The business should be able to retain customers by using excellent customer service.

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author avatar tina5giga
11th Mar 2014 (#)

Thanks Clarence!

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author avatar RY
16th Mar 2014 (#)

Loyalty programs and rebates are also anti-competitive sometimes.

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author avatar tina5giga
17th Mar 2014 (#)

Yes RY, when not well designed and implemented.

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