Loyalty Rewards Program: Top Myths Debunked (Part – II)

The fact that business owners are wary of setting up a Loyalty Rewards Program shouldn’t come as a surprise. With numerous myths and assumptions associated with the customer loyalty programs, it is not difficult to understand why cynicism regarding their ability to deliver returns persists.

Myth 1: The only goal of a customer loyalty rewards program is to retain customers with discounts and offers.

Truth: Yes and no. Sure, retaining customers by offering them discounts or rewarding them with points is important, but that is not the only goal. Today, the thrust is on building a close-knit community of loyal customers who share interests and passions.

A Loyalty Rewards Program is intimately connected to the brand image and thus, needs to be more emotional, personal and differentiated. Most successful customer rewards programs have a pivot which sets them apart from others – be it the use of technology, social connection, or tie-ups with developmental organizations. The larger goal should be to build a community of recurring customers, engage with them on a regular basis and offer them relevant discounts and information.

Myth 2: Customers don’t want to be bothered by long forms or with incessant promotional communication.

Truth: There is no need for customers to fill out long-drawn forms. Customer accounts are managed today by just a single piece of customer contact information (like a phone number or email). Physical forms, or loyalty cards, have slowly been giving way to application-based sign-up and cloud-based loyalty solutions. In the future, one can expect a further integration of technology in the domain of customer loyalty management. Even today, highly sophisticated loyalty management software are aiding businesses in retaining customers.

Research also suggests that as long as the promotional information that the customers are receiving is relevant, they don’t mind getting it. As a matter of fact, a majority do not mind sharing personal information in return for more relevant and personalized offers.

Myth 3: If customers are already loyal to one brand, they won’t want to be part of another loyalty program.

Truth: Customers and shoppers do not mind joining simultaneous reward programs from business competitors. This is especially relevant in businesses dealing in retail and utilities (like groceries, fuel) etc. According to studies, customer spending and visit frequency between different brands may vary, but continue to be are attracted towards better discounts and rewards. The bottom line is that customers are always on the lookout for ways to save more. Regular customers might have informational advantage in the stores they visit frequently, but their loyalty level isn’t one hundred percent.

Naturally, businesses with a bigger market share have the customer informational advantage. However, smaller businesses are also likely to thrive in the environment because of the near-steady pricing they offer. Hence, smaller businesses need not worry about problems like price wars, offering discounts by cutting deeply into margins and ceding a significant portion of their market share to rivals.

Myth 4: Simply registering with a Loyalty Management Software will help my business grow.

Truth: Do not expect a customer loyalty program software to increase retention and sales overnight. A Loyalty Rewards Program needs to be well-thought out and fundamentally strong. Globally, engagement with loyalty program has been on the decline, because most businesses are trying to copy the same formula. The predictability and complexity of some programs have resulted in their failure. However, there exist enough examples that have infused creativity and innovation into their customer loyalty programs (consider Starbucks or Nordstrom).

The success of your customer loyalty program is not contingent on the sophistication of the loyalty management software, but how you use the same. More specifically, it boils down to what customer data and information you collect (and how you do it), and more so, what you do with it.

Loyalty Rewards Program: Top Myths Debunked (Part – II)

Myth 1: The only goal of a customer loyalty rewards program is to retain customers with discounts and offers.

Myth 2: Customers don’t want to be bothered by long forms or with incessant promotional communication.

Myth 3: If customers are already loyal to one brand, they won’t want to be part of another loyalty program.

Myth 4: Simply registering with a Loyalty Management Software will help my business grow.

If you still happen to have any doubts, drop us a line!

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