Do your loyalty program offers have weakening redemption rates? Is outstanding liability uncomfortably high? Even if your program was once going strong, these are early warning signs of an impending breakdown in customer engagement and profitability. Steer your program back on track with these three fixes.
Analyze breakage. You know not every customer reward gets used. Evaluating this breakage — and its affect on revenue — can help you strike a balance between customer engagement and program profitability.
If breakage is too high, it could signal customer disinterest. You may need to offer more relevant rewards.
If breakage is low, your discounts may be too deep — and you may be operating at a loss.
Ramp up redemption with the right messaging. Targeted messaging is a top tool for encouraging rewards redemption. Gap Inc., for instance, sends loyalty members personalized emails reminding them of unused rewards and expiration dates, and provides quick links to “shop now” and “print rewards.” Redemption is especially important for getting program newcomers involved — so consider targeting this group with special incentives to redeem (for instance, doubling the reward value when they redeem within a specific time period).
The medium plays a big role, too: Email reminders can quickly engage and mobilize online shoppers, while statement reminders are more subtle and less actionable.
Use data to keep rewards fresh. As time goes on and the environment shifts (competitors, demographics, economy), your once-valuable benefits may lose their luster in customers’ eyes. Get ahead of such trends by using customer data to regularly analyze and predict behavior — and adjust your rewards offerings before they lose momentum.
These are just a few ideas for putting your loyalty program on the path to increased loyalty and profitability. If you’d like to discuss additional strategies, let’s talk!