Overcoming the Pitfalls of Loyalty Reward Programs through Proactive Communications

February 8, 2011 - With 1.8 billion consumers enrolled in an average of 14 loyalty programs, it is no wonder that many rewards are expired or unclaimed long before customers even notice. Who can blame them? They are being bombarded with offers, mailings and information from all directions.

But,  this simple fact remains: customer reward programs are one of the best ways to improve customer retention and increase sales.
 
To accomplish this, businesses need to match their communication tactics with their customers’ ever-changing preferences. For instance, in today’s mobile world, coupons and promotional codes delivered to mobile devices are quickly replacing fliers and mailings.   Do you really know how your customers want to be reached?
 
The key to standing out in this saturated market goes back to fundamental marketing. Businesses must better understand how, where and when customers prefer to receive your information – and deliver it based on that demand. Following are five of the most common pitfalls made by companies today with tips about how to overcome them.

• Pitfall #1: Overlooking the mobile revolution— Businesses need to take advantage of the popularity of mobile devices. The number of cell phones is expected to surpass the total number of Americans by the end of 2012. Text messaging is proving to be great avenue for welcome messages and reminders. Text and mobile communications are morphing into the preferred communication of choice for a growing number of consumers.  According to a 2010 survey from Harris Interactive and SoundBite Communications, 43 percent of consumers would act upon loyalty program benefits if coupons and promotional codes were delivered to their mobile device. Organizations should adapt to this trend and create active dialogues with customers through text messaging, whether soliciting communication preferences or delivering actionable offers and account notifications.

• Pitfall #2: Being one dimensional—Using more than one communication channel will help businesses increase redemption rates and revenue. Studies show that multi-channel strategies result in a threefold increase in redemptions, versus relying on just one channel, equating to millions of dollars. So, make sure you incorporate several customer touch points, such as e-mail, text and social media.
 

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