The Problematic Awareness Gap Consumers Face in Loyalty Programs (And How to Fix It)
Loyalty programs are a tremendous benefit to building and maintaining customer relationships with brands and publishers alike. These programs help provide insights into customer preferences and behaviors, can increase customer satisfaction and provides an opportunity to create engaging touchpoints and opportunities to drive sales. Marketers are faced with a challenge with loyalty programs – customer engagement. […]
Loyalty programs are a tremendous benefit to building and maintaining customer relationships with brands and publishers alike. These programs help provide insights into customer preferences and behaviors, can increase customer satisfaction and provides an opportunity to create engaging touchpoints and opportunities to drive sales. Marketers are faced with a challenge with loyalty programs – customer engagement. Although a 2017 eMarketer report found that the average shopper belongs to 17 different loyalty programs, they only actively participate in 6.7 of them – less than half. This creates a hurdle that marketers need to learn how to overcome, but few actually do. One of the reasons this could be is because most customers aren’t aware of what they’ve earned within their loyalty programs.
Marketers will need to take on the lack of awareness problem that plagues loyalty programs if they hope to increase participation and yield better engagement. In this blog post, we’ll explore the lack of awareness in loyalty programs, how a customer wants to access their information, and finally what marketers can do to raise awareness – and thereby participation and ROI – of their loyalty programs.
(Note: We recognize that every loyalty program has their own terminology, but for the convenience of this article, we’ll refer to anything a customer accrues as “points” and anything they can redeem as a “reward.”)
Loyalty Programs’ Lack of Awareness Problem
Customer participation can be challenging for loyalty programs because most customers don’t know where they stand within a program. eMarketer published a study highlighting just how many customers don’t know what they have in their own loyalty programs. The study found that only 30% of shoppers know exactly how many points and rewards they’ve earned in a loyalty program. Comparatively, 18% don’t know how much they’ve earned at all. But a 52% majority of customers who are in loyalty programs aren’t certain one way or another what they have, responding that they “don’t know” what they’ve earned over time, or if they have any offers sitting idly in their account.
This is a serious problem for brands that offer or participate in a loyalty program. More than 50% of users say that without having access to their program information most of their rewards will go unused or expire because they’re not even aware they have a reward. This loss can create several problems, including:
- Less purchasing motivation: If a customer doesn’t know about something they have, they’re going to be less motivated to buy with a brand or company.
- Frustrating experiences: It’s not just customers missing an opportunity to redeem a reward or earn points that brands should focus on, it’s the impact that this unawareness has on the customer’s experience. If a customer finds out that they did earn a reward but lost the opportunity to use it before they even knew what they had, that’s going to create a very negative experience. The customer could get frustrated and decide to shop elsewhere.
- Loss of participation: If customers repeatedly find themselves unsure of what their status is in a loyalty program and can’t easily access that information, they may just decide to shop elsewhere or abandon the loyalty program altogether. This is an issue of convenience that brands do face, and in the next section, we’ll review what these challenges are.
With a greater understanding of this lack of awareness, the next step is to keep the customer informed about what they’ve earned in their loyalty program participation. There are two ways to accomplish this, with customers having different preferences based on each method.
How Do Customers Want to Get Loyalty Information
There are two solutions to get more of your customers aware about what their accrued loyalty points and rewards are: giving them more accessible ways to get information about their loyalty program and delivering that information to them.
eMarketer examined both of these loyalty program solutions to identify what customers prefer for each one. When customers want to access the information themselves, 32% said they’d like to do so through a link in a text message. Using a mobile app to access the information was the second most-preferred solution at 28%, and accessing the information through a website on a desktop was third with 19% of respondents. This demonstrates a customer behavior pattern that we’ll dive into in just a moment.
Things are different for customers when they’re not looking to access their information, but looking to have it delivered to them instead. This is a crucial difference that marketers need to be mindful of – not all customers will seek out information about the status of their loyalty program, but all customers will need to be periodically updated if the brand wants to keep those customers engaged. That means the brand needs to do some heavy lifting and keep customers informed from time to time.
When customers get a message about the status of their loyalty program from a brand, they prefer to get it by email. 42% of consumers said that email is their preferred channel when getting loyalty program information from a brand, followed by 32% who preferred text messages. Comparatively, only 15% of respondents wanted a push notification from a brand’s mobile app about the status of their program.
This tells us some key things about the mindset of consumers, and how a brand can enhance their loyalty program:
- Consumers want easy access to information about their program. The most popular responses for ways to access their loyalty program was direct and required a minimal amount of heavy lifting.
- Consumers are also likely trying accessing this information as they’re shopping. The same data shows us that consumers are leveraging smartphones much more often than desktops, and the three of the top four responses were mobile-based. This could be implying that consumers are “on the go” when they’re trying to get this information pulled up and want to take advantage of it quickly.
- When consumers are getting the information delivered to them, they want it in a location that they deem convenient. In this case, that location is their inbox. This could imply easy access across multiple devices being a huge benefit for consumers, or that having a central location for this information makes it more manageable.
- When consumers are having the information delivered, they likely don’t want it to be disruptive. Getting information delivered to their inbox is good, but having a push notification might be a little too upfront for most consumers.
Benefits of Raising Customer Awareness About Their Loyalty Program Participation, Points and Rewards
There are many tangible benefits that brands and publishers can gain from activating awareness tactics to their loyalty programs. Below are some examples of the biggest gains an advertiser or publisher can earn if they help customers become more aware of what they’ve earned in their loyalty program participation.
Better Customer Experiences
Giving your customers a great shopping experience is critical, and finding ways to continually improve on that experience even more so. If you offer a loyalty program, you’ll want customers to have a good experience with it. This can help increase usage, build even more loyalty, and help appeal to new customers who might sign up because of the positive things they hear about it.
Greater Shopping Motivation
Four out of every ten shoppers said that regular updates about their loyalty program would give them a motivation to visit a site or brand more often. The reasoning behind this is clear: consumers who know what they have will want to take advantage of having it. For example, if they’ve earned a coupon reward they’ll want to use it before that coupon expires. Keeping customers regularly updated about the status of their loyalty program will keep them coming back to find something they might be able to use their rewards or points on.
Greater Purchase Consideration
53% of shoppers who are in loyalty programs said that getting updates to their program would do more than just make them motivated to shop – it would make them consider purchasing a product as well. The logic is similar to the one above where if consumers know what they have they’re going to want to try and find ways to take advantage of it. This differs because it shows the importance that having well-informed loyalty program participants can have on a brand’s bottom line. Keeping your loyalty consumers informed means a brand can improve on things like purchase conversions, customer satisfaction, and ROI, as well as decreasing things like CPA.
Opportunity for Improved Personalization
This is a strong, forward-thinking aspect of loyalty programs for brands. If a brand is able to use loyalty information about the consumer to deliver product recommendations based on purchase history, more specific rewards, or suggest new products the consumer might like based on personal preferences, they are taking a huge step towards delivering a more personalized customer experience that the customer will enjoy. 85% of customers said that they would enjoy personalized recommendations based on their profile, and 66% said the same about their purchase history. Personalization is huge for consumers and brands alike, and loyalty programs are a great way to tap into that experience.
For even more information on loyalty programs, reach out to Rakuten Marketing today!