We’ve all been there. You get to the front of the queue in your local store and the assistant asks for your loyalty card. As you open your wallet, you realize you have to shuffle a dozen other cards first before you find the one that you need. Airline cards. Hotel group cards. The card for the coffee place by your office. But the end result isn’t just a bulky wallet and a longer queue behind you. It’s apathy too.
The fragmentation of customer loyalty programs
Most consumers belong to many customer loyalty programs, but are not active in a lot of them. They realize they will never collect enough points to redeem for something useful. So they lose interest in participating, and most of those loyalty cards end up in a drawer rather than the wallet.
Fragmentation of customer loyalty programs doesn’t benefit merchants much, either. The typical 1% of value that is given back to customers in the form of loyalty points is ok as long as they shop often enough. But many times a proportion of this 1% in redemption value is lost to intermediaries.
Customer retention strategies based only around points might work for the top spending 10% – 15% of consumers, but the rest are often left wondering whether it’s worth it. Amongst other things, they see their points expire, realize that there are limited places to acquire points, they lack the ability to combine points with money to complete purchases, and they realize those points they do earn have a low economic value. The majority of consumers just don’t get value from standalone programs. They simply cannot spend enough for the 1% to add up.
Rising customer expectations
If there has been one overriding consumer trend in recent years, it is the increasing choice and convenience offered to customers by the smartphone and digital channels. This in turn has ushered in an increase in their expectations of brands. It’s a shame, then, that there’s such a sense of missed opportunity with customer loyalty programs.
While it’s true that wallet sizes are shrinking as people download loyalty apps onto their smartphones, any real economic benefits remain negligible. Fragmentation also makes capturing Big Data more difficult. Therefore customers aren’t being targeted in the kind of useful, personalized way that could really drive engagement.
Social media has changed the brand-consumer relationship. It has taught brands to involve consumers and engage with them rather than simply shouting the loudest to sell products. By replicating this strategy and putting the customer first when planning loyalty strategies, the value for both consumers and merchants can be significantly enhanced. The easier it is for customers to get value from a loyalty program, the more likely they will be to continue spending. And by spending more they provide merchants with valuable data for future targeting.
How to end the apathy
One way of achieving these cyclical benefits would be to allow the consumer to collect one, universal loyalty currency instead of several. Aside from trimming wallet size and the number of smartphone apps, it would allow the consumer to accumulate more value and redeem much more easily. At Currency Alliance, we’ve developed such a universal loyalty currency. It’s called comcoin. We believe it can put a stop to consumer apathy around loyalty programs and revolutionize the industry.
If you want your loyalty program to appeal to many more customers, perhaps it’s time to consider offering a loyalty currency that is perceived as valuable by people beyond your top 10%-15% of existing customers.
If you would like to talk further, have any comments, or would like information about comcoin, please get in touch with us.