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Loyalty fatigue: How brands and retailers can combat it

Brands and retailers have consistently relied upon loyalty rewards programs to offer consumers incentives in exchange for repeat business. In fact, one study found that the average U.S. citizen has 38 loyalty memberships. But, of those 38 memberships, consumers are typically active in an average of 12 programs.

When it comes to exploring the reasons why consumers aren’t using their loyalty programs, brands and retailers should consider the fact that consumers may be experiencing loyalty fatigue. It’s not that shoppers lack the willingness to reap rewards from their favorite brands and retailers; it’s more that there are just so many loyalty programs out there. It can be overwhelming to keep track of all the different loyalty program cards, rules, and redemptions. That’s why brands and retailers who make their programs as effortless as possible are the winners in the quest for consumer loyalty. 

What Is Loyalty Fatigue?

Loyalty fatigue refers to the trend of decreased rewards program participation. At a certain point, an overburdened consumer may no longer want to join new programs, deletes existing apps, and fails to redeem rewards.

The idea of loyalty fatigue goes beyond anecdotal evidence. A 2017 report found:

  • The average U.S. household is part of 30 different loyalty programs.
  • Fifty-four percent of these loyalty programs are inactive, billions of dollars in rewards unclaimed.

Another consumer trends survey found that:

  • Twenty-eight percent of customers said they shopped more often at venues which had loyalty programs. Yet, this loyalty influence had declined from 34% in 2013.

A brand or retailer might be inclined to wonder whether a loyalty program is worth having in 2020; the answer is still a resounding “yes,” and here’s why:

  • Customer retention is cheaper than acquisition.
  • Consumers say they favor companies that offer rewards.
  • Rewards remain central to the shopping experience. 
  • More than half of a company’s business comes from existing customers.
  • Increasing customer retention by 5% can boost profits 25% to 95%.

A rewards program may not be what makes a shopper loyal, but a good rewards program can maintain loyalty and provide evidence that you’re doing everything else right and actually creating a favorable experience for your shoppers.

How to Combat Loyalty Fatigue

1. Simplify your program. 

Many travelers are dismayed by the complexity of their programs. How do they amass points? How are the points redeemed? Some customers receive different answers from different representatives over the phone. At North Face, a simplified program means the customer receives 10 points per $1 spent. Balances can be checked on the brand’s app. Smile.io software links online and offline spending to the program. 

2. Expedite your rewards.

combat loyalty fatigue “Buy 10 cups of coffee, get the 11th one free” is a decent incentive for the daily customer, but what about the monthly or infrequent buyer? This offer is not enough to secure their loyalty because the reward is too far off in the future. According to research, customers who receive instantaneous rewards spend up to 25% more compared to traditional redemption models and 55% more than using no loyalty program at all. If you are still using the coupon model, consider creating them with no expiration dates. Allow points to roll over from year to year and consider sending out coupons to members who haven’t earned points in the last six months to re-engage and lure them back. 

3. Re-think your perks.

Many loyalty programs outlive their usefulness. Consider Macy’s, for instance. If a person spends $500 a year in the store, they qualify for free shipping. A shopper can simply go to a competitor who provides free shipping with no minimum purchase requirement. Instead, consider the perks cosmetic company Tarte offers its reward members—expedited shipping, triple points during one’s birthday month, and access to exclusive products. Shoppers value generous return policies “with no questions asked,” special access to classes and events, and free “VIP” gifts. In other words, they want to feel part of the “in” crowd.

4. Emphasize program value.

Barnes and Noble’s rewards program costs users $25 a year. But how do they get buy-in? By emphasizing value, of course. They explain to shoppers that their $25 per year will get them: free shipping on all orders, 40% off hardcover bestsellers, 10% off everything else, and $60 in email bonus coupons upon joining. After describing these benefits, Barnes and Nobles includes glowing testimonials from program users who love it. 

5. Link mobile.  

Next to having a simplified process, there are a number of other ways to delight shoppers amid the crowd. For starters, not many desire to carry around a bunch of little plastic cards for each rewards programs. Linking your rewards program channels from your eCommerce site, to your physical store card, to your mobile app is a feature that most consumers expect these days. Seamless integration creates a better user experience, which drives shopper satisfaction. 

6. Form a partnership.

Like loyalty fatigue, consumers get app download fatigue too. Instead of competing with all the other loyalty apps out there, why not partner with an app people already love and use, and still reap the benefits and garner loyalty. 

Consider Shopkick—a mobile rewards platform with an already loyal userbase. Here’s how the rewards platform works: Users can check the Shopkick app to see which brands or retailers offer “kicks,” or rewards points, which incentivize them to visit a store or browse online. Because Shopkick features incentives from multiple retailers and brands, users don’t have to worry about signing up for those individual loyalty programs unless they want to. And even then, shoppers will be delighted to find that Shopkick can be used in conjunction with retail- or brand-specific apps. Eventually, Shopkick users redeem their kicks for free gift cards, which builds a positive affinity and loyalty for the brands and retailers that awarded them. 

You want shoppers to trust you and to feel as though they’re always winning—not waiting for a hard-earned promise that will take multiple purchases and store visits to manifest.

Loyalty programs aren’t creating loyalty, so much as delivering a consistently satisfying customer experience. You want shoppers to trust you and to feel as though they’re always winning—not waiting for a hard-earned promise that will take multiple purchases and store visits to manifest.  

Looking for a partner who can help you beat loyalty fatigue? Read our partners’ success stories and contact Shopkick to learn how easy it is to get started driving loyalty right away.

 

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Image courtesy of Pressmaster