The Top 5 Myths of Customer Loyalty Programs

A good customer loyalty program has the ability to increase sales, customer visits, and lift average ticket dramatically. Yet, with a general lack of knowledge regarding loyalty programs, many companies fail at creating and maintaining a truly successful and engaging loyalty program. Because it is cheaper to retain an existing customer rather than buying a new one, it is vital to understand the in’s and out’s of launching a customer loyalty program prior to launch date. Because of this, we’ve compiled a list of the 5 most common myths associated with customer loyalty programs.

  • Myth 1 – Loyalty programs work better when the reward is bigger
    • Untrue. Ask any customer – a tailored and customized experience trumps a reward with a larger value any day. Not to mention the inherent value of personalization is far reaching – customers will remember the experience and return for repeat business with personalization and great customer service. Loyalty programs are only truly beneficial when the customer can capitalize on the benefits. Just think – it’s not the size of the reward, but the way the customer is valued and rewarded for their continued patronage.
  • Myth 2 – The loyalty program will spread on its own
    • Like wildfire, right? Wrong! The success of any customer loyalty program depends on your customer’s being adequately informed. But don’t panic – this doesn’t mean you need to have a huge marketing budget. Use your employees to spread the word, generate hype, and sign up new members.
  • Myth 3 – Customer loyalty programs must be for select customers or existing ones only
    • This only works if you’re trying to be exclusive or members-only, which isn’t applicable for a majority of businesses creating customer loyalty programs. Loyalty programs are about gaining loyalty from your customers  – not excluding a large chunk. Every customer can be a loyal customer if you treat them right.
  • Myth 4 – A customer loyalty program will definitely increase sales
    • We like to think so, but things can definitely go south if you don’t setup your program correctly. If you setup your program specifically to increase sales, you’re unlikely to succeed, just like if your program is too complex or it takes too long to earn a reward.  A successful loyalty program is setup to benefit your actual customers – take the customer’s wants, needs, and expectations into account and you’ll be on your merry way to increased sales.
  • Myth 5 – Your customer loyalty program will translate to loyal customers
    • Attention span is low among consumers. As most loyalty programs are fleeting, getting your customer’s attention quickly and being able to hold it is essential for success. Because of this, it’s important to make long standing customers feel like their loyalty is being adequately rewarded. Nurture the relationship with constant customer engagement and relevant rewards. Dependability keeps your customers coming back and further strengthens brand loyalty. Decreased attrition = increased sales.

Success and failure of customer loyalty programs depends on various internal and external factors. High team member involvement and widespread knowledge dramatically increases customer participation and subsequently, increases sales. On the flipside, a lack of understanding and personalization of rewards causes a severe decrease in customer participation and therefore, less chance of success. Make your customers feel important and include your team members as vital components in your marketing efforts. We guarantee you will not regret it!