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4 Signs It’s Time to Change Your Loyalty Program

Effective loyalty and rewards programs evolve with shifting guest demands and preferences.

Has your brand taken a close look at your loyalty program lately? If not, it’s time to measure how effective your loyalty program is at engaging guests so they keep coming back. Even if your loyalty program seems to be working to achieve your goals, customer expectations change over time. Even tried-and-true rewards programs occasionally need a facelift.

“Even if it’s well designed, a program can always benefit from a revamp that implements the latest best practices,” according to restaurant and retail customer experience software provider Paytronix. “Improving your loyalty program demonstrates commitment to your customers and can increase visits, spend and retention across the board.”

Taking a look at your loyalty program metrics is the first step toward a rewards program revamp, says Paytronix. As you dive into what’s working — and which elements aren’t achieving your goals — you can clearly see where your brand needs to improve your loyalty program.

Four factors that call for loyalty program redesign

Here are four signs that your rewards program needs a revamp, according to Paytronix.

1. Member enrollment is declining

If new member enrollment is down, the low figure could signal that your rewards program isn’t exciting enough. Many guests don’t even take time to enroll. Or maybe they’re not even aware of the program. Low enrollment could be due to the following factors, suggests Paytronix:

  • New customers have little interest in the program
  • Enrollment methods are too difficult or time-consuming
  • Employees aren’t telling customers about your rewards program
  • Your marketing department has stopped promoting the loyalty program

Look closely at whether your rewards program gets the value proposition — benefits guests receive by enrolling in and participating in the program — across so that customers want to participate. Make sure servers and your marketing department tell guests about your rewards program.

Be honest in your appraisal. Is your program enticing? Or is it just “meh” in the eyes of your customers? Then find ways to make the program more interesting to guests so they enroll.

2. Loyalty penetration is down

Take a look at the share of transactions from guests in your loyalty program. “Your program should achieve a minimum of 15% loyalty penetration, meaning 15% of total transactions are attributed to your program,” says Paytronix.

If that percentage is lower, it’s likely that loyalty program members aren’t engaged enough to participate to earn rewards.

3.  Your loyalty program is too generic

One-size-fits-all loyalty programs don’t work for today’s guests, says Paytronix. Guests want personalized programs that reflect their personal shopping, dining and other habits.

“Generic campaigns can also hurt your bottom line by creating cannibalization — when regular customers begin redeeming rewards on purchases they would make regardless of the discount,” says Paytronix. “Segmentation is key to attracting guests with relevant messages, but it’s also a safeguard to ensure that your loyalty program is building customer lifetime value and maximizing revenue.”

If your program offers only one type of discount on products or services, it’s too limited and likely falls into the “too generic” category.

To determine whether your loyalty program is too generic, ask the following questions:

  • Does our loyalty program produce a compelling return on investment?
  • Does our program enable our brand to run special offers and other targeted promotions?
  • Does our rewards program firmly establish our brand identity?

“If not, management may be unclear on why you have this program, and changes may be needed,” says Paytronix.

4. The program no longer aligns with strategic goals

If your loyalty program isn’t aligned with your brand’s objectives and rewarding guest activity, it may be time to redesign the program.

“These four indicators don’t necessarily require changes to your program, but there may be cause for a relaunch or some additional management attention,” says Paytronix. “If you’re seeing the above signals, you should take a careful look at your program design.”