Running a loyalty program is a long-term endeavor with lots of twists and turns along the way. Sometimes you might feel that you aren’t sailing full steam ahead. That’s because overlooking small, yet significant, details can handicap your reward program’s potential. These pesky loyalty program problems aren’t always apparent — and some might not even be your fault. Some problems may simply be caused by shifts in customer expectations.
To help you assess your program’s performance in a data-driven manner, here are 10 loyalty program statistics that uncover the biggest reasons why your loyalty program isn’t working.
1. It’s Too Difficult or Takes Too Long to Earn Rewards
Customers join a loyalty program to earn rewards and get instant gratification. Dangle the carrot in front of their eyes too much, and they’ll turn you down. This is, in fact, the biggest pain point for loyalty program members.
According to Statista, 45% of US customers claim that rewards taking too long is the number one reason for disliking a loyalty program. In second place, 31% of customers say they get frustrated when earning rewards is too difficult.
How to avoid this loyalty program problem
- Offer both high-value and low-value rewards so customers can always redeem something affordable
- Give new members a welcome gift so they get a taste of the benefits early on
- Adjust the point-price of rewards in a way that customers don’t have to grind too much for rewards
2. The Program Only Focuses on One Type of Benefit
Balancing the value proposition of a loyalty program is no easy task, especially because every customer segment has different preferences. Though it’s not recommended to spread yourself too thin with reward types, offering something other than discounts is one way to keep things fresh and exciting.
The For Love or Money 2022 Report identified that, in Australia, 60% percent of customers prefer to receive financial benefits, like cashback or coupons. The other 40% was distributed between rewards like early access, VIP treatment, birthday rewards and special ambassador clubs.
How to avoid this loyalty program problem
- Try to find a healthy balance of rewards — offering just discounts or just experiential rewards leads to an equally tilted experience
- Try including partner rewards, which make the reward catalog more colorful, especially when gifts, freebies or merchandise are involved
- Offer early access to products, VIP customer service and downloadable content, which are rewards that all have a high perceived value
3. Market Awareness is Low in Your Region
Not every region or country shares the same level of enthusiasm towards loyalty programs. Some markets are more mature, while others are under-engaged. If you belong to the latter, getting customers to enroll or spread word-of-mouth is much harder.
In its 2023 report, titled ‘Understanding Loyalty in Europe’, Mando-Connect identified Norway as the country with the highest percentage of loyalty program members, and Turkey with the lowest percentage.
How to avoid this loyalty program problem
- Use incentivized surveys to learn about customer preferences and offer a personalized experience that caters to the region’s unique needs
- Launch your loyalty program as a solid MVP with tried-and-tested features, then add new capabilities based on audience responses
- Consider using badges and challenges to subtly shape customer behavior, getting them to refer friends or leave product reviews
4. The Concept Is Getting Outdated
Loyalty trends are in constant flux. A decade ago, tiered programs were still considered a selling point, but nowadays, they are more of a hygiene factor. As time passes, it’s only natural to re-evaluate your program and modernize it by adding new features or updating the loyalty logic.
Antavo’s Global Customer Loyalty Report 2023 forecasts an increase in renewed loyalty programs, as 78.6% of businesses want to revamp their reward system in the next three years. This is a seven percentage point increase over the previous year’s results.
How to avoid this loyalty program problem
- Keep your loyalty program concept up-to-date by adding new features every two to three years
- Upgrade your tech stack if your current one doesn’t live up to expectations
- Before committing to a new tech provider, thoroughly weigh your options and issue RFPs to see each solution in action
5. There Isn’t Enough Personalization
Personalized deals and offers are the secret sauce of a loyalty program. If customers receive rewards and messages that feel relevant, they are more likely to use them. Skipping on personalization and generalizing the experience will leave them disinterested and eager to try a competitor’s program.
According to the fifth edition of the State of the Connected Customer report by Salesforce, 55% of customers would use loyalty programs more if the rewards were personalized and better reflected their individual needs.
How to avoid this loyalty program problem
- Personalization only works if you have data — you need to know how to utilize your loyalty program to collect relevant data
- Birthday reward emails are an ideal way to test your personalization strategy because they also have a surprise & delight effect
- Use gamified surveys to learn about customers’ favorite types of rewards, and then make sure to offer what they want
6. It Lacks the “Wow” Factor
Loyalty programs are like amusement parks. They have to be fun and thrilling across the board, but they also need one definitive spectacle that draws a crowd. In other words, you must stand out because modern customers expect to be impressed.
In its 2022 State of Customer Loyalty report, Loyalty360 shows that 71% of customers think there is a “Sea of Sameness” regarding customer loyalty programs.
How to avoid this loyalty program problem
- Gamification is still a largely uncharted territory that has room for innovation and creative ideas for loyalty programs
- High-value experiential rewards can be an effective centerpiece for your loyalty program marketing
- To catch the attention of certain niches, establish early access clubs centered around special product categories or brands
7. No Members-Only Offers
When someone enrolls in a loyalty program, they expect special treatment. Most customers want more bang for their buck or want to be part of an exclusive group. It is important to make members feel special through exclusive deals or rewards. Otherwise, they may turn away.
According to Forrester’s The State Of Customer Loyalty And Marketing Technology, 65% of US online consumers who belong to loyalty programs say that members-only offers are important to them.
How to avoid this loyalty program problem
- If you have tiers, you can combine multiple members-only tiers
- Investing in offer management and segmentation helps you create rewards that are region or channel-specific
- Members-only rewards don’t have to be coupons or discounts — they can also be free content or invitations to exclusive community events
8. Your Loyalty Program Is Isolated
A loyalty program shouldn’t be a lonely island, but rather a busy hub on a data highway. Your program can elevate your data strategy by both collecting and infusing loyalty data, but only if it’s part of an ecosystem that includes marketing automation and CDP technologies, just to name a few.
An established and well-connected tech stack is the mark of a mature organization. As it stands in Gartner’s findings, only 29% of developing organizations have a CDP, compared with 56% of high-maturity organizations.
How to avoid this loyalty program problem
- Consider how you can make your loyalty program an important part of your tech stack — even during the concept phase
- Make sure to think outside the box and integrate other technologies, like sports activity trackers
- Faulty integrations are just as bad as not having any integrations at all, so don’t rush the implementation phase
Remember, Revamping Is Always an Option
When you realize that your loyalty program isn’t working because of one of these problems, you can do two things: either introduce a feature that solves the issue (adding gamification elements, for instance) or, if the issue is fundamental, go back to the drawing board.
Don’t worry. Revamping your loyalty program can easily lead to better results, so it’s worth the time and effort. If you are interested in switching to a loyalty program platform that fully supports next-gen reward programs, then our experts would be happy to hold a showcase. So wait no more; book a demo or send us an RFP.
If you are looking for more trends about the current and future landscape of loyalty programs, download our Global Customer Loyalty Report 2024.
