For years we’ve preached that nuts-and-bolts can make or break a loyalty program. Economics. Mechanics. Business rules. Communications. That’s still true. Get the blocking and tackling wrong and you lose.
It should be easy to avoid tactical errors in program design; loyalty practitioners have counted, sorted, catalogued, and packaged the most common pitfalls into come-ons promising to help clients avoid them.
• “Four Common Mistakes Restaurants Make with Loyalty Programs”
• “Five Common Mistakes That Derail Loyalty”
• “Ten Loyalty Program Problems”
• “Eleven Reasons Loyalty Programs Usually Fail”
Do I hear twelve?
And yet Big Brands that ought to know better make basic mistakes all the time. We recently called out a major QSR brand that botched two programs in as many years. The current version manages to get the financials and mechanics so wrong that not only is the program sure to fail – their own franchisees, apparently not having been consulted, are publicly up in arms about the disastrous new program.
We’re really, really good at designing and optimizing highly successful loyalty and engagement programs. To be honest, most of our competitors can also help with the basics. Then why do so many brands make so many avoidable mistakes?
The real reasons programs fail are often deeper than design mistakes. Let’s call them foundational, rooted in core business practices and organizational dynamics.
That’s why we start by asking, why do you want a loyalty program, and how will you measure success?
There are lots of good answers. Drive repeat purchases, increase frequency, enlarge basket size, stem attrition, incent new product trial, reward brand advocacy. Some needs are more complicated, like driving customers to more profitable channels, or to a preferred payment platform. And there are other perfectly legitimate reasons, like, “our competitors all have programs,” or, “the CEO wants a program.”
The key is understanding what you want a program to achieve, and ensuring internal alignment on those goals and how to measure them. You might be surprised how often there is a lack of agreement on the goals and metrics of loyalty efforts.
The process must begin with understanding the specific business needs and capabilities of multiple stakeholders, not just marketing, but finance, operations, technology, and customer service. Identify the specific outcomes a loyalty effort can achieve. Use input from stakeholders, research, and expert knowledge of best practices to reach agreement on and commitment to a customer engagement strategy.
Let’s say that again: before considering program design, a successful effort must have a strategic commitment to business goals and metrics.
That kind of commitment can be challenging to achieve. Often the best outcome can be facilitated by a consulting partner experienced in weighing all the factors, distilling them into a coherent and actionable strategy, and socializing them to reach alignment.
Only then can the right approach best be designed and implemented, whether launching a new program or optimizing an existing effort.
We’re here to help our clients navigate this process. And we’d welcome an opportunity to discuss your specific challenges and opportunities.