Why Loyalty Programs Fail? Top Five Tips to Make Yours a Massive Success

by | Jul 19, 2023 | Loyalty Programs

A repeat customer is better than a new customer. Loyalty makes a customer closer to a business, making them purchase again and again. However, that does not mean that the repeat customers are to be forgotten while focusing on grabbing new customers.

How to make the repeat customers stick to your business?

Make your customers feel that they are special to your business, that will make them stay loyal. Customer loyalty programs increases loyalty in the customers making them reach you every now and then. Effectively designed loyalty programs can achieve this in no time.

Are loyalty programs worth it? Loyalty and customer incentives programmes have shown to be a successful means of increasing client lifetime value and fostering loyalty. Are loyalty programs successful? Not always. The next query bugging your mind will be this. Why loyalty programs fail? Through this blog AD Vantage is answering you.

Before that let us find out how loyalty program works and why loyalty program is important for your business.

Why use loyalty programs?

Customer loyalty is the act of consistently choosing a company’s products and services regardless of cost or accessibility. Loyalty program dynamics are continuously changing to meet the preferences of younger audiences, respond to urgent needs, and keep up with the fiercely competitive market.

Customers are happier and more likely to stay with a company if they feel appreciated. Customer retention is better the longer customers stay.

When a consumer signs up for a loyalty program, they give your business the opportunity to connect. Those customers who return to your business frequently are the ones who are most inclined to spend more money with you.

Why do loyalty programs fail?

You are trying to make someone happy and you are putting sincere efforts for that. If you plan something blindfolded, without knowing the expectations and wishes of the receiver, will it be complete?

This is the best way to make you understand why loyalty programs fail for many businesses. If you don’t understand the behaviour of the customers and what they expect from your business, you can never make them feel valued or rewarded for their loyalty.

Too many businesses treat awards as transient promotional handouts or monthly specials when it comes to design and implementation. Finding methods to differentiate your loyalty program from the competition is the herculean task while designing a loyalty scheme.

When used appropriately, rewards can add value by encouraging both current and potential customers to try a certain good or service. However, they won’t provide anything close to their potential worth until they are made to encourage loyalty.

Inappropriate reward selections

Better rewards need not necessarily be more expensive to offer. Delivering a reward that is more appropriate for your audience could be the solution. Most of the businesses forget to keep the loyalty program schemes live and active. When the  customers are left alone in the loyalty scheme, they won’t find it thrilling when they move to higher levels of the scheme.

What if you launch the best ever loyalty scheme, but the customers are not able to enjoy its fruits? When you come up with a program with an intention to reward your loyal customers, ensure it reaches all. Let the geographical barriers and locations not screw it.

Examples of failed loyalty programs throughout the globe points out to inappropriate rewards that makes the customers feel demotivated and tiring.

Are you too stringent in the validity of the loyalty schemes you offer? Never push the customers to redeem the coupons and vouchers you offer. The moment you try to create an urgency in the customers to utilize it, they may not be able to enjoy the journey.

Lack of expertise

Another significant factor contributing to the failure of the loyalty programmes is the lack of skilled design and execution. Without carefully examining the company, its goals, and its message, a loyalty program’s design will fall short of the mark.

Let’s check out the major loyalty program flaws resulting from lack of expertise

  • Minimal incentive
  • Unrealistic objectives and products
  • No distinction between large and small customers
  • A lack of motivation to expand the business

Lack of emotional connect with the customers

Limiting loyalty programs to only business-related reimbursements and award disbursement is a significant missed opportunity. Loyalty programmes go beyond incentive plans and have to be used to create enduring connections with the partners. Therefore, developing emotional connections is crucial for the program’s success.

When you give the best to your loyal customers, they would crave for the next purchase with your business. Some businesses offer the same rewards to all of their customers. There is little purpose in loyal clients continuing with your firm for years if new consumers and repeat customers are treated similarly.

When the loyalty program is designed in a blunt way, without understanding the customer journey and spending patterns, it loses it credibility among the loyal customers. This is an important reason for the failure of the customer loyalty programs of many top brands.

Lack of monitoring strategies

If you don’t have a monitoring strategy to get feedback from customers on their experiences with the loyalty programs, it will never be complete. Utilizing customer opinions and feedback will help you understand the effectiveness of the loyalty program improve the bond with your loyal customers.

Many businesses don’t find it important to monitor the loyalty schemes after its launch. When you don’t spare time to understand if the program is reaching your loyal customers and their pain points in utilizing it, it will be a failure.

The moment you identify the drawbacks in the loyalty program solutions and the pitfalls, you can rectify and redesign the program. Without an effective loyalty program monitoring metrics, the success and reach of the program can never be measured.

What makes a loyalty program successful?

Let’s discuss the vital elements that makes a loyalty program successful, giving a two-way benefit for both the business and the customers.

Define clear goals

What’s the objective behind the loyalty scheme you offer? Unless you have a clear-cut answer in your mind, the loyalty program you launch will never create an impact. Your loyalty program would taste failure if it lacks goals connected to goals and quantifiable KPIs.

A loyalty program is expected to increase sales and help businesses achieve their margin targets. Consider both long-term initiatives that span several years as well as a short-term marketing plan that is centered on a single year.

Design new strategies

Design new loyalty programs strategies and excite your customers at regular intervals. When the customers receive something new every time, obviously they would love to return to you.

Are you thinking of redesigning your existing loyalty scheme? Make sure you consider the value exchange between your program and your customers carefully. Revamping of the existing loyalty program should be done by thoroughly understanding how value is created and delivered, benefiting your customer and your business.

Club your loyalty program with your brand

Instead of a general set of offers, customers should be offered with product offers that are pertinent to them. Your rewards program should be a  brand extension that changes your relationship with customers from one that is just transactional.

Keep your loyalty program design simple. Let the program you design be an extension of your brand statement, conveying the brand message to the customers in a beautiful way. Keep in mind your products/services and what the customers would expect from you. Make both blend in a creative way and design a loyalty programme crating a noise in the marketplace.

Optimize your loyalty program

 Optimize the loyalty programs when you feel it’s not properly reaching your customers or the customers no longer find it beneficial or enticing.

Make the rewards valuable and attainable, not passive. Don’t think that offering your customers lots of membership options, and redeem coupons can make them happy and loyal. Too many elements in loyalty schemes often creates a mess, making your scheme not reaching your loyal customers.

Loyal customers would be dissatisfied if the loyalty program you launch lacks exclusivity and they find it hard in locating the scheme’s advantages.

Hire an expert

One of the most crucial step as you plan the next stages for your loyalty program is the assistance of a loyalty management company. A loyalty program created and forgotten over time will not reach the customers as you expect.

The business should continually improve it and innovate new strategies to make it stand out. Hiring an expert loyalty program service like AD Vantage would constantly keep an eye on your loyalty scheme, giving it creative toppings every now and then.

Seeking the assistance of a loyalty program company will understand your business goals and design a customized scheme addressing both the repeat customers and the new ones.

With monitoring metrics like Net Promoter Score (NPS), Repeat Purchase Rate (RPR), upsell ratio etc., loyalty program services would follow the schemes and analyze the reach of the program.

Consider how your customers add value to your business and how you can serve your clients most effectively. Make everything clear and simple to grasp. A “set it and forget it” approach can only make things worse. Closely monitor your loyalty programs and how customers perceive it.

The best way to stay connected with your customers and talk about your loyalty program is social media. Stay in touch with your customers and let them know about your scheme through social media posts, and also email marketing.

Why accept failure when success is just a call away?

Connect with AD Vantage Integrate Marketing and grab the best loyalty programs in India. With a well-built team and customized loyalty schemes, we offer the best experience to your loyal customers.

With the help of our market experts, we design customised loyalty schemes that are promptly rectified. We offer assistance with a professionally planned and executed loyalty program strategy, assisting your businesses in easily achieving the goals.

We serve you with loyalty programs that develop relationships with your customers and turning them into fervent supporters over time. Our loyalty program strategies give you a major competitive advantage over your competitors, helping you retain your customers.


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