Loyalty program challenges
Companies that offer a loyalty program face various challenges in this day and age. For starters, the pandemic of the past two years has only served to heighten the already-high standards of today’s consumers.
Furthermore, the available data volume continues to rise, use cases get more sophisticated, and regulations evolve. Technologies are constantly evolving at an ever faster pace, and MarTech solutions swarm the market in greater numbers. Naturally, it can thus prove challenging to stay on top of things and find the optimal solutions to fulfill the demands of the company and its customers.
Some of these issues are not unique to loyalty programs. However, with the increasing number of loyalty programs on the market, it is more important than ever to identify the major loyalty program challenges so that you can implement the tactics needed to solve and profit on them.
Particularly, because 71.6 percent of companies offering a loyalty program expect to revamp their program in the next three years, according to a study of CMOs and loyalty specialists conducted for the Global Customer Loyalty Report 2022 – a report we co-authored with Antavo and PwC. Companies and loyalty experts may use these challenges to create a roadmap for their program’s growth.
Top loyalty marketing challenges for program owners
Companies with loyalty programs have identified the main challenges they expect to face now and in the future within this survey. In fact, here are the top three:
1. Offering a seamless omnichannel loyalty experience;
2. Integrating loyalty marketing into the company’s main strategy;
3. Collecting customer data.
Here are some specifics on how companies may deal with each of these challenges.
Challenge #1 Offering a seamless omnichannel loyalty experience
The recent rise of e-commerce, as well as the expansion of channels and contact points, explains why companies are more concerned about providing a seamless omnichannel loyalty experience.
Were you aware that earning and redeeming points both online and in-store does not always mean a smooth omnichannel loyalty experience? Communication with members via email, SMS, and social media is not the ultimate answer either.
So, what exactly makes an omnichannel loyalty experience seamless?
Providing a seamless omnichannel loyalty experience implies delivering your members a consistent experience across all your channels. It includes online or in-store purchases, customer support, various communication channels, etc. Customers connect with your brand on a variety of platforms and seek a uniform and consistent experience across all of them when it comes to the loyalty program.
Starbucks’ reward program is an excellent example of an omnichannel loyalty experience. While the experience is predominantly mobile-based, it is also available online and in stores. Members may use the app to pre-order coffee and pick it up in-store. They can pay with their physical or mobile Starbucks card, buy items at grocery stores and claim their stars online. They can also play online games from shopping in-store, and more. All of this happens in a smooth and consistent manner, which ensures that Starbucks customers are excited for more reasons than just their coffee!
What is the benefit of providing an omnichannel loyalty experience?
With an omnichannel loyalty program, a business can connect with its members wherever they are and reward them for all interactions they have with the brand. As a result, members will buy more and more frequently as they become more engaged with the brand.
As demonstrated by Harvard Business Review, omnichannel clients are more loyal than customers who only use one channel, recording a 23-percent greater frequency of in-store transactions with the former.
An omnichannel loyalty program also collects more data on its members. It also develops a more complete understanding of their preferences, on top of enhancing engagement and sales.
How do you deliver a seamless omnichannel loyalty experience?
A good place to start is by documenting all the ways your brand and clientele may communicate and do business together. All of these channels must be covered by the loyalty program.
Synchronize you member data. Make sure their status is recognized across all contact points. Ensure that reward redemption is straightforward and consistent across all sales channels, whether in-store, online, or via an app.
Non-transactional interactions and engagement with your products and brand values may also gain in expanding the omnichannel experience beyond traditional channels. Let’s take for example a running shoe store that awards members for every mile they run. A restaurant owner who rewards donations to food banks. An insurance company that encourages healthy habit adoption. Don’t be afraid to get creative with your loyalty programs, because the rewards you provide will reward you as well!
However, keep in mind that creating a seamless omnichannel loyalty experience is the number one loyalty marketing challenge for businesses offering loyalty programs. It would be a mistake to believe that omnichannel loyalty is straightforward and simple when it comes to its implementation.
Also, companies that wish to expand their loyalty programs will undoubtedly have to make choices and prioritize after all channels have been identified. First, determine which channels are most likely to advance the company’s goals as well as its members’ needs and expectations. It is much better to go about it gradually, one channel at a time, rather than aiming for perfection across all channels and never getting there. Before you run, you must learn to walk.
Challenge #2 Integrating loyalty marketing into the company’s main strategy
The capacity to integrate loyalty marketing into a company’s main strategy is the second most critical challenge mentioned by companies that offer loyalty programs.
A successful loyalty program can boost revenue, customer engagement, and satisfaction while also lowering acquisition costs and customer attrition. Despite this, many businesses fail to integrate customer loyalty strategy into their main business strategy.
What does it mean to integrate loyalty marketing into a company’s main strategy?
Integrating loyalty marketing into a company’s main strategy entails prioritizing customer loyalty in strategic choices. As seen in the Global Customer Loyalty Report, customer loyalty and loyalty programs have a major influence on overall strategic business choices. In fact, 66.4 percent of companies that do have a loyalty program said so.
To integrate loyalty marketing into a company’s main strategy, it must be engaged with and evaluated on a daily basis. Customer loyalty must be emphasized at all levels of the organization, beginning at the top with decisions, communication, and processes. Along the same lines, everyone should weigh the impact of a decision on customer loyalty when making a decision.
Why is it critical to integrate loyalty marketing into the main strategy of your company?
Other than marketing, there are several departments involved in deploying and managing a loyalty strategy. To be successful, a loyalty program should therefore include multiple (if not all) sectors of the company. IT is engaged in platform implementation and management; the business intelligence department is involved in the acquisition, management, and use of data generated and required by the loyalty program; finance deals with point and reward management, and so on. Let’s also not forget customer service, operations, and even HR, which must train employees on the program and set performance objectives.
As a result, a loyalty program has an influence at every level of the organization. Furthermore, in a world where competition is fierce and omnipresent, customer retention and satisfaction are crucial. Increased client satisfaction and retention are thus the ultimate goals of customer loyalty programs, which makes it a long-term strategy with tremendous financial and non-financial benefits for businesses!
In fact, 62.1 percent of organizations with a loyalty program claimed their program helped keep customers engaged throughout the COVID-19 crisis, according to our report. If you wish to thrive as they did, consider investing into customer loyalty!
How can loyalty marketing be integrated into a company’s main strategy?
Loyalty should be treated as a corporate effort with visibility at all levels. The good news is that everything in loyalty programs can be measured. It is possible to assess and show program performance by defining expectations in advance and using clear metrics. It is not too late to start defining objectives and measurements if they have not been specified yet.
While many of these indications will be monetary, the advantages of customer retention go beyond that. As a result, it is critical to define the indicators appropriately, such as the customer satisfaction rate, Net Promoter Score, or retention rate.
The benefit of creating clear metrics is that they may be used to set performance objectives at all levels of the organization, in addition to enabling the presentation of program performance at the executive level. In turn, this is critical for ensuring that loyalty marketing is well integrated into the company’s main strategy.
When each department has customer loyalty as a performance goal, the entire organization becomes involved in its own success, which has an influence on how teams handle customer loyalty concerns and opportunities. Teams will be more likely to consider the influence of their decisions on consumer loyalty and a loyalty-based company culture can emerge as a result.
Challenge #3 Collecting customer data
Respondents to the Global Customer Loyalty Report 2022 survey ranked data collection as the third major loyalty challenge. The process of collecting first-party data is becoming a greater challenge for businesses, having risen from last place to the top five at the start of 2020.
What is first-party data?
First-party data, also known as proprietary data, includes all information collected directly from your customers — via online, in-store, surveys, subscriptions or customer service. This data is a major business asset — you can copy a product or obtain the same third-party data as your competitors, but you cannot copy the information collected directly from their customers.
And loyalty programs are a goldmine for gathering first-party data.
Why is it important to collect loyalty data?
To make up for the lack of other types of data
Data collection is critical in an increasingly omnichannel market, as organizations seek to engage members across all channels. Furthermore, current privacy legislation and limits on third-party data may explain the need to acquire first-party data.
To identify your best customers
The value of data-driven marketing cannot be overstated. From acquisition through retention, it has an influence on the client’s entire journey. It is impossible to discover your greatest and highest-potential consumers without correct data. Therefore, companies want to learn more about their clientele so that they can give a more personalized experience and make better decisions. This has set the value of first-party data on the rise.
To better satisfy customer needs
Data on customer loyalty, is critical when it comes to taking the best decisions. Businesses can customize their communications, experiences, rewards, and more, by knowing exactly what consumers want and need. For example, this data can have a direct impact on your product development, marketing, and market development.
How do you collect loyalty data?
A customer loyalty program gathers transactional information and links it to a specific member. However, there are other ways to collect data through a loyalty program. Questionnaires, user profiles, quizzes, and product evaluations are good examples. Customers’ preferences can also be obtained via offer and incentive experiments.
The most essential thing is to establish data gathering goals. When it comes to sharing personal information, 54 percent of customers are willing to do so. Moreover, 63 percent expect personalized service. On the other hand, if a brand’s use of personal data is intrusive, 69 percent of customers will quit doing business with it.
As a result, you must have a data gathering plan in place so that you do not lose yourself in the process or even fail and lose your customers.
However, data collecting is not a goal in and of itself. You should remember that gathering the data is merely the first stage. You will also need a defined and transparent strategy for how you will use the collected data.
Are you interested in learning more about customer loyalty program challenges and trends? The Global Customer Loyalty Report 2022 is available for download. If you would like more information, please feel free to contact us. We will be happy to assist you in putting your loyalty program into action and optimizing it.
