BUSTING LOYALTY MYTHS

How well is your loyalty program doing?

Sure, you measure carded play, and turnover and visitation – all that hard data.  It tells you what percent of your customers are using their cards, what they are spending and how often they come – but it doesn’t tell you how your members feel about your loyalty program, or how your programs benefits stack up against your competitors. It doesn’t tell you what they like and don’t like.

The truth is, clubs can spend a big chunk of their marketing budget on loyalty programs, but they don’t necessarily understand them.

Research from a company called Loyalty360 reveals what customers really think – and feel – about loyalty programs.  Two key findings from that research highlighted a couple of myths:

Myth #1:  Having a member in your program is equivalent to convincing them to engage in your program. 

If only it were that easy! Having a member in your program, even when it is an opt-in program, is only the first step. Why do some members become active program participants and others just don’t? Here’s what the results showed when people were asked why they did not become, or stay engaged, in a loyalty program after joining:

  • 41% Benefits are too hard to earn or take too long to earn.
  • 22% Rules are confusing or unclear.
  • 19% Not enough reminders/communication about the program after I joined.
  • 18% Program is boring.
  • 17%  Benefits/rewards are not appealing to me.

The takeaway from these results is that we have to make sure there is an easy way to obtain at least some type of reward (f&b discount, free entries, etc.), and that members understand this process. Make sure that they know how to earn and redeem points, and what they can be used for. Communications that you send to members should clearly explain benefits and how they can be earned. Members also want ongoing communications about the program and what is available for them.  Just giving someone access to your program is not enough. The program needs to be progressed and needs constant communication with those members who are important to your business.

The first few months after you launch a program, or a new member joins your club or your program, are the critical ones, so review your “new member” or launch activities and see what you can do to “beef up” your members’ learning curve about the program.

Myth #2: Consumers primarily join loyalty programs for mercenary reasons.

This study identified four main reasons why people joined an “opt-in” loyalty programs. While earning rewards was the top reason, it actually accounts for less than half of all customers as to why they join a loyalty program.

  • Mercenary – 43% (I wanted to earn rewards.)
  • Inertia – 37% (Easy or automatic to join – no effort on my part.)
  • True Loyalist – 15% (I love the company, its products and services.)
  • Cult – 3% (I identify with the company’s purpose and values, and feel part of the “community” with other customers.)

The number that we should be concerned about is that well over a one-third of members join a loyalty program simply because it’s there – and remember this survey was based on “opt-in” programs. So if you offer automatic entry to your club’s program with membership, then that percentage will skyrocket.

Additionally, 43% of all customers in loyalty programs – say that they “pay very little attention to programs or no attention at all.” And again, these are opt-in programs that they have actively elected to join! 

This inertia in your membership ranks can be a very expensive problem. You’re signing people up (or giving away automatic entry) for your loyalty program, but in actual fact, your members don’t really know or care about the program.

Remember, just getting someone to join your loyalty program is only the first tiny step; to make it a profitable relationship for your club, you have to get the member engaged in your program.

And you have to tailor your program to suit your particular members and what they want. Too many loyalty programs are exactly the same, offering the same benefits and the same choices and therefore giving members no reason to choose one club over another.

However, I’ve also conducted customer surveys where loyalty program benefits are the number one reason why those members choose to visit one club over another. So knowing what your members want from a program and how you can make it better, how your members rank your club program, and how it compares to your competitors’ programs could translate into a more appealing program, a more effective use of marketing dollars, and increased profits.

Your Marketing Mentor specialises in conducting focus group research. If you would like to know more, contact Linda Joannides by emailing linda@yourmarketingmentor.com.au or call 0419 954 999.