Customer Rewards: Avoid Breaking the Virtuous Cycle

A customer rewards strategy can create a virtuous cycle for a business: customers keep coming back and businesses keep using the data that they provide to refine their products or services. What businesses sometimes miss however, is the importance of making sure that claiming the acquisition or loyalty reward is as simple as possible. If it isn’t, the virtuous cycle can easily be broken.

Over the last few years there has been a massive amount of work put into creating and maintaining customer loyalty schemes. There’s been some exceptional technology created and truly innovative strategies implemented to help customers collect reward points, with customers agreeing to have their purchasing data analysed in return.

This data has changed the way that buyers, marketing teams and even space-planners work, delivering insights that would have been inconceivable a decade ago. This knowledge has not only made retailers’ lives easier, taking some of the guess work out of forecasting for example, it’s made customers lives’ better, putting the right products front and centre and ensuring that promotions are relevant.

This burgeoning expertise has, in turn, spawned a very healthy industry in supporting companies, helping retailers get the right technology in place and understand the data that’s being generated. It should, in theory, create a virtuous cycle that delivers more data, more insights and help keep fine-tuning customer offerings.

But there’s a problem.

There’s often not enough thought put into how easy it is for customers to spend their reward points. Fiddly websites, complicated sign-in processes and unclear instructions can cause a great deal of frustration. This can suck the joy out of claiming a reward and make a customer less likely to repeat the process of earning the reward.

Digital Rewards in an instant

Customers shouldn’t have to jump through hoops

If a customer saves up their points over several months, when the time comes to spend them, they should expect to come away with a smile on their face and the feeling that it’s all worthwhile. If the transaction doesn’t come together as easily as they expect, they are going to feel twice as frustrated. They’ve upheld their side of the bargain and provided their purchasing data to a retailer, so why is the reward proving so difficult to achieve?

Let’s face it, it’s disappointing when you go to a shop and find the thing that you want isn’t in stock, but it’s exceptionally disappointing when you find it is in stock but you can’t have it because you haven’t brought along the right form of identification. Circumventing this sort of disappointment is what customer loyalty is supposed to be all about.

Making sure that the process of a customer getting their rewards is as simple and as consistent as possible should be one of the key parts of a customer rewards strategy. If it’s difficult, fiddly or a rigmarole, customers will quickly get irritated, particularly if they feel that the retailer is not upholding their side of the bargain by trying to wriggle out of supplying the promised rewards.

  1. Customer brings retailer their business
  2. Retailer offers reward for customer’s purchasing data
  3. Customer agrees to let retailer analyse their purchasing data
  4. Customer brings back with more business
  5. Retailer offers reward for customer’s purchasing data
  6. Retailer gains further insight
  7. Customer brings retailer further business while spending reward

There’s no point to customer rewards if recipients don’t feel valued

If the customer feels let down or even cheated, they are less likely to bring their business back at the end of a rewards process, breaking the relationship cycle that an effective reward strategy can create.

Repeat customers are an important part of maintaining the health of most businesses, and an effective loyalty strategy can deliver exceptionally useful insights that can help keep bringing people back through your doors. Overlooking or neglecting the final part of the cycle through poor customer service or inconsistent reward processes can damage a brand in the long term, so ensure that you take the time to plan the end to end loyalty process thoroughly to maximise your return.