Retailers are investing heavily in loyalty programs and customer relationship management, with the loyalty management market estimated to be worth nearly $6 billion in 2022. However, research shows that more than three-quarters of loyalty programs that rely on transactional models fail in their first two years. To ensure success, companies must be aware of the potential pitfalls of loyalty programs and invest in the right areas.
Retailers are investing heavily in loyalty programs and customer relationship management, with the loyalty management market estimated to be worth nearly $6 billion in 2022. However, research shows that more than three-quarters of loyalty programs that rely on transactional models fail in their first two years. To ensure success, companies must be aware of the potential pitfalls of loyalty programs and invest in the right areas.
McDonald’s CEO Chris Kempcziski recently noted that loyalty is the single-biggest driver of digital adoption, and mobile apps are becoming increasingly popular among food merchants. However, apps require ongoing care and feeding after being launched, and exclusive offers should be regularly nurtured.
Data collection is also important, but companies should be careful not to collect too much information. It is often more effective to focus on 12 to 15 data points that are relevant to the program’s purpose and goals.
Welcome gifts are also important, as 63% of consumers register for rewards programs solely for the initial membership gift. Signup bonuses should reflect the brand promise, rather than being arbitrary giveaways.
Retailers should also consider mapping the customer journey, as this can help to identify challenges such as it taking too long to earn a reward. Companies should also avoid cookie-cutter “personalization” and instead invest in trusted analytics systems, including machine learning.
Finally, retailers should budget loyalty program training as they do customer marketing and store maintenance, and consider looking outside for help to get the most up-to-date thinking and best practices.
According to a Korn Ferry survey, retail employee turnover rose across the board in 2002, from the frontline to the corporate offices. Companies should invest in loyalty initiatives to anticipate and follow the customer on their journey, and avoid the 75% failure rate of loyalty programs.
Sources:
Statista. (2022). Global loyalty management market size 2022 | Statista. Retrieved April 11, 2021, from https://www.statista.com/statistics/845862/global-loyalty-management-market-size/
McMillen
Sources: https://www.forbes.com/sites/jennmcmillen/2023/04/11/10-ways-mcdonalds-pampers-and-others-invest-smartly-in-loyalty/
