Is your rewards program drowning you in loyalty debt?

Maverick
Feb 19th, 2023
358 views 6 MINS READ

Is your loyalty rewards program effective? Or is it just going through the motions as per the script? Do you wonder if your rewards program is appealing to your customers?

Is your rewards program drowning you in loyalty debt?

The rewards program is one of the effective strategies that businesses often apply when they want to analyze customer interaction with their product or service based on how the rewards work. These reward programs, however, are frequently prone to loyalty debt. Because the earning and burning procedure is inefficient, people tend to accrue points but never burn them.

Because it is based on accumulating points acquired and burned, this program is only appealing to customers when they receive their rewards. If your audience does not reach that stage, your loyalty plan is not achieving its full potential, and this might be a clue to upgrade, delivering hyper-personalized and relevant rewards, as well as The impulse to action, which will prompt the user to spend what they have earned.

Where does loyalty debt come from?

Loyalty debt has become one of the major concerns in rewards programs. When a business begins developing a loyalty program for its products and services without conducting extensive research on customer demands, it is very likely to incur loyalty debt. Users will not have to convert their accumulated points into rewards. Rewards and loyalty programs will be unable to deliver the benefits a business wants when the earn and burn system in the program does not work according to its original model.

This problem has an easy solution as well. You just need to set an expiration date for that loyalty program. This will assist you in canceling your loyalty debt, although the program’s effectiveness is not high. Or you may use a management platform to provide superior analysis of what customers want from your business, and you can develop a loyalty and engagement program that people desire to use. use. Better aligning rewards alternatives with customer preferences through hyper-personalized services is a far more effective strategy to eliminate loyalty debt than simply letting points expire.

In this manner, your audience receives what it truly desires: a great experience.

Loyalty debt and ways to repay it

1. Discount

The discount strategy is an excellent tactic that will never go out of style. When a customer reaches a particular number of points, it will be translated to the relevant money and subtracted directly from the invoice. For example, the rule states that a consumer must have more than 100 points. In fact, a customer’s card with 110 points will receive a discount of $50 on the next purchase bill. The conversion value depends on each business. It might be 1 point corresponding to $1, or 2, 3 points… From there, it will stimulate customers to actively participate in the program to accumulate points and redeem gifts, reducing loyalty debt. However, businesses should consider choosing a conversion value that is not only suitable for long-term loyalty campaigns but also stimulates customers to participate.

The direct discount on shopping bills for existing customers who have accompanied the business for a long time makes customers feel this is a special privilege and also makes them feel that they are being supported by the company. Enterprise respects loyal customers. Besides, businesses also need to help customers believe that they have earned that money because they are loyal customers. It is the message that customers will spread and persuade others to believe.

This discount will create excitement for “buying without paying” for customers, encouraging customers to shop more, which is very beneficial for them to continue buying next time to enjoy the customer loyalty program. At the same time, this is also one of the easiest user retention tactics.

2. Use point of purchase

This is also one of the effective tactics. Customers can use their previous points to swap for products or services that meet their demands for 0 VND. These 0 dong things will be considered deals by many customers because no one can refuse a free item. This method not only allows you to collect data on client engagement for the campaign but also for other commercial goods. From there, businesses can easily come up with strategies to promote advertising about those product lines. However, you can also get creative in your own way to make your rewards program more effective and get more engagement. Instead of the accumulated customer score that will be recorded as 1 point or 2 points you can replace it with other names such as stars or candy. This will distinguish your program from other loyalty programs on the market and pique the interest of your clients.

3. Give a gift

This is another intriguing method of exchanging points. Customers who acquire a certain number of points will be given an equivalent prize. For example, when a customer accumulates 50 points, they will be given a water bottle, when they acquire 80 points, they will be given a cloth bag, and when they amass 100 points, they will be given a t-shirt and so on. However, set milestones and gifts appropriately to keep customers satisfied. Note, that the higher the score, the more valuable the gifts should be. As a result, consumers will consider milestones as a goal to achieve and actively participate in shopping at the business.

Scale up your loyalty rewards programs

4. Upgrade membership level

If you do not want to be passively owed loyalty, you can refer to this form. Businesses may be proactive in turning earned points into presents for consumers using this form, and they won’t have to worry about their program becoming overburdened with loyalty debt. You can assign bonus points as a way to upgrade customers. Membership tiers will include silver, gold, diamond, VIP, and so on. Each level will enjoy certain incentives. You should have a specified scale of the number of points customers need to achieve and how to achieve those cumulative points so that everyone can easily follow. The higher the level, the greater the incentive. For example, diamond members get 15% off the bill and VIPs get 20% off. This way also creates the psychology of customers wanting to level up. They will participate in more aggressive customer loyalty programs.

ezLoyalty: Solve your loyalty debt with technology

This is the program that offers the best earn-and-burn system. Our earn-and-burn incentive system automatically records points for each purchase, which may then be utilized by customers to exchange gifts or promotions. It will assist you in developing a personalized rewards system that is optimized to reduce loyalty debt while enhancing positive customer experience through segmentation. It empowers you to target certain client groups and provide them customized benefits. Not only that but your rewards program will be able to scale due to the integration of ezLoyalty and other omni channel solutions. ezLoyalty also enables better customer experience integration between online and offline channels

Another feature that will assist you in creating a really appealing personalized rewards program is the platform’s ability to allow seamless integration with any and all rewards merchants. Nothing stands in the way of a fantastic loyalty customer experience when a solution is easy for both you and your consumers to use.

Contact us for more information or request a demo to see the platform for yourself.

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