By Matthew Stern
Despite all the offers and perks, a significant number of customers turn their noses up at loyalty programs. A full 38 percent of consumers are not interested in joining due to their lack of perceived value, according to a study conducted by CFI Group and Radial.
The RetailWire BrainTrust went deep into what is making some customers so hesitant to sign up in an online discussion last week, detailing a laundry list of common missteps.
“If the retail brand itself is not compelling, no amount of perks or extra discounts will provide an incentive to join a loyalty program,” wrote Dick Seesel, principal at Retailing in Focus. “… If retailers think that loyalty is generated just by price incentives (instead of added service and other benefits), they are making a big mistake.”
“When the programs are too complicated, or it’s difficult to track the benefits, I think that’s when people are more likely to just opt out all together,” wrote Nikki Baird, vice president of retail innovations at Aptos. “It’s also important to remember the ‘rule of seven’: people in general can’t hold more than seven things in their mind and that translates to loyalty programs too (as well as credit cards). If every retailer has a loyalty program, and consumers are only willing to participate in up to seven of them because that’s about all they can keep track of, then there are going to be retailers who are going to lose no matter how straightforward their benefits are.”
“Consumers are hip to the fact that loyalty programs benefit the retailer,” wrote Liz Crawford, CEO of Crawford Consulting. “Some are wary of feeling ‘used’ to fuel the profitability of the business. Others feel that the benefits of the loyalty program simply aren’t worth the hassle of getting spammed.”
“Customers won’t open their door to a deeper relationship (especially one that requires them to provide more data) if they don’t trust your brand,” wrote Evan Snively, loyalty strategist at Maritz Motivation.
The study suggests that to get hesitant customers on board, retailers should offer faster delivery, personalized customer service options and more flexible returns. In the study, 63 percent of survey respondents said that the option of speedier delivery influences them to sign up for a loyalty program, 41 percent said that recognition as a loyalty member from a customer service associate would incentivize them to buy more and 55 percent said that multiple exchange options made them more likely to repeat purchase.
The RetailWire BrainTrust had other detailed recommendations to make loyalty programs more appealing – many of which revolved around establishing value and trust.
“Trust can manifest itself in different ways — from having an alignment on social views, to having provided a past track record of good experiences, to simply making it abundantly clear what the value prop is of the loyalty program,” wrote Mr. Snively.
“These kinds of value exchange relationships need to be perceived as a good bargain, just like deals on merchandise; they are evaluated the same way,” wrote Ms. Crawford.
“Retailers and other companies with loyalty programs need to design (or redesign) programs that offer compelling value and do an excellent job at quickly and clearly communicating that value,” wrote Rob Gallo, CMO at Impact 21. “Sign up needs to be simple, fast and not intrusive. Then they need to (over) deliver on that promise.”
“I would emphasize the need to reduce complexity. Just make it simple to understand and be rewarded,” wrote retail expert Mohamed Amer. “Don’t focus solely on the transaction with discounts; although appealing, they’re not differentiators or loyalty builders. Design a program around exclusivity, convenience, personalization and ease of use that creates a value engagement that speaks to the individual customer and not an entire cohort.”
“Make it valuable and unique to the shopper or don’t expect them to care,” wrote Dr. Stephen Needel, managing partner at Advanced Simulations.