6 biggest mistakes of loyalty programmes
Couple weeks ago in an interview I mentioned in detail what our experiences are from building loyalty programmes which increase revenue. Part of this experience is to not repeat mistakes that the others have done while building programmes. In my oppinion these are top six mistakes that various companies repeat.
1. Loyalty programme as a “perpetuum mobile”
Many times top management of companies believes that Loyalty Programme as soon as it is launched becomes magical tool – a perpetuum mobile that automatically generates cash. Great programmes require active work and constant improvements. Launching a card with point-based scheme is not enough.
2. Loyalty programme full of waste
Programme rewards based on unimportant products and irrelevant services. It is much better to give members 2-3 benefits which they like and perceive, rather than making the programme a trash can for all the “junk” that I find in my company. Typically companies with such programmes claim following: “We give our members 20 different benefits”.
3. Loyalty programme in autopilot mode
Inability to measure revenue set measurable financial goals for the programme. Many times the destiny of a loyalty programme is based on pure marketing intuition. Good intuition is important, but it takes good measurement to ensure that programme thrives for a long time. One needs to meausure real financial effect, not just the number of members and average revenue per member of a programme.
4. Silent loyalty programme
Absence of active communication with the programme members. Many loyalty programme do not proactively communicate with members. Those that communicate usually do mass mailings that are irrelevant and customers consider them to be a spam.
5. Loyalty programme without analytics
Absence of customer data analysis – many times companies become satisfied that customer data are sitting on the servers, but there is nobody who analyses these data and learns from customer behavior. Analysing loyalty programme does not mean to look at the top 5 indicators on monthly basis. One needs to go below the surface.
6. Loyalty programme runned as IT system
Emphasis is put on the IT system behind the loyalty programme and not the actual content – many IT suppliers are presenting various loyalty systems and intelligent cashiers. The truth is that when my cash desk can add points for spent euros I am still several light-years away from real programme, which shall be based primarily on sales-marketing thinking and not on some “magical” system. Most of these implementation over past 20 years is considered as major failures with unjustified IT costs.