7 Common Mistakes of Frequent Shopper Programs – The Outlier Model

Frequent shopper programs are a simple concept. As the name implies, they are designed to benefit stores’ frequent shoppers and create a connection with the customers. Rather than simply attracting repeat customers with the lowest prices, they should also deepen customer loyalty. However, not all programs are created equal. Although they should be easy to use, some make it overly complicated or impossible to achieve rewards. Rather than incentivizing people to come back, they may actually be driving business away. Here are 7 of the most common mistakes of frequent shopper programs to help you determine which ones are worth joining and which ones to avoid.

What Are the Most Common Mistakes of Frequent Shopper Programs?

American shoppers hold an astounding 3.8 billion memberships with customer loyalty programs. However, while the average person has joined 14.8 frequent shopper programs, only 6.7 remain active. So, what motivates people to utilize some benefit programs and abandon others? Chances are the unsuccessful programs have made at least one of these common mistakes of frequent shopper programs.

1. The rewards aren’t worth the effort.

It goes without saying that customer loyalty programs should provide real benefits to their members. This could be in the form of cashback, coupons, exclusive discounts, and partner rewards that bring value to their customers. However, if the rewards are weak or hard to redeem, people may decide they aren’t worth the effort.

When consumers don’t see the value in joining the program or can find lower prices elsewhere, there is little incentive to join. Furthermore, complicated rules and restrictive programs will cause many people to abandon frequent shopper programs before they even have the chance to use them. If the program isn’t easy-to-use and the rewards automatically awarded, few people are going to waste their time with it.

2. They only reward the most frequent shoppers.

In that same line of thought, another one of the most common mistakes of frequent shopper programs is that they only reward their most loyal customers. Undoubtedly, people who use the programs most should receive more benefits. But, if rewards are only offered to the highest-tier spenders, people are unlikely to invest the time or money it takes to accrue enough points to redeem them. Additionally, customers who were initially attracted by the program’s rewards may become discouraged after they realize how long it will take.

Businesses can’t be afraid to reward customers who use the program. In fact, market research shows it is more profitable to encourage members to redeem their rewards. Although customers get freebies and discounts when they claim their rewards, it will promote long-term loyalty. In turn, this boosts the company’s profit margin.

3. It is unnecessarily difficult to redeem rewards.

If the program is too difficult to understand or use, customers will avoid it. The whole point of customer loyalty programs is to reward people for shopping with your company. However, many frequent shopper programs have too many rules, restrictions, or criteria which make it seem impossible to redeem rewards.

It shouldn’t be a hassle for customers to get the benefits that they were promised. No one wants to jump through hoops or spend hours navigating systems and waiting to speak with a customer service agent. The best frequent shopper programs realize that automatic rewards are a powerful tool that helps increase customer loyalty.

4. The earning periods are too short.

Another common mistake is that programs don’t give customers enough time to earn the rewards. Offering incentives to increase sales during a specific time frame is a good marketing strategy. But, if the earning period is too short, then most people will never spend enough to earn the awards. Some customers may think it is a scam or the benefits unachievable and shop elsewhere. Instead of building customer loyalty, it may actually be driving people away.

5. Only certain purchases are eligible for rewards.

In addition to short earning periods, another problem is that frequent shopper programs only reward transactional activities. When you only allow rewards for certain items or purchases, it means that only a few people are going to benefit.

Therefore, more customer loyalty programs are starting to offer rewards and engage customers outside the buying circle. Businesses are learning that you can draw more attention to your program by offering additional benefits for completing surveys, reviews, social media interactions, or donations with your company’s charitable partners. While you can still provide greater benefits for transactions, recognition loyalty gives you valuable touchpoints outside of transactional activities.

6. They don’t offer incentives or referral bonuses.

Underutilizing your customer base is yet another of the most common mistakes of frequent shopper programs. If your business has a strong customer loyalty program, they will tell their friends and family. And, they may even write positive online reviews boosting your company’s reputation. You can’t overlook the influence word-of-mouth can have on your bottom line.

Offering referral bonuses and incentives is a great way to attract new customers and increase both retention and future sales. Furthermore, tiered rewards motivate people to invite even more to join your frequent shopper program.

7. They limit how people can engage with the program.

Successful marketing campaigns and loyalty programs must focus on the customers. After all, they are the driving force behind every business. So, it would make sense that you find multiple ways to reach out to your customers.

In the digital age, omnichannel access has become an expectation. Therefore, you can’t restrict how customers engage and interact with your business. In addition to the official website, you can connect with people through mobile apps, social media, email promotions, and traditional mailouts. However, you are severely limiting your reach if you dictate the medium customers use to communicate and redeem awards.

Although these are some of the most common mistakes, there are multitudes of reasons why frequent shopper programs succeed or fail. What is your experience with these programs? In your opinion, which are the best and which ones should you avoid at all costs?

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