Why Do Customers Leave Loyalty Programs?

Loyalty programs are there to retain customers, right? It is to build a strong loyal customer base that we use them in our businesses. And until now, all that you’ve been caring for is how great loyalty programs are in driving profit and how to get more customers to join your program. But, did you also know that a scary number of customers leave loyalty programs for reasons that you had no idea about?

If your loyalty program makes your loyal customers abandon you, then there’s got to be a huge issue with the program and the way you utilize it.

Too much communication

A survey conducted recently by Campaign Monitor found that 53 percent of consumers said they received too many emails from retailers.

The same goes for text messages. Yes, they gave their mobile numbers and email addresses to you so that you can contact you about promotions, offers, announcements etc., but unless you are also their boyfriend, girlfriend, or bestfriend, trust me they don’t expect you to be jamming their inboxes with frequent messages. One solution that makes thing easier and better for both the customer and the business is to ask when the customer subscribes to your communication methods their preferred frequency of receiving texts/emails. That way no one gets hurt!

Design issues / Lack of customer education

A recent research study by the Edgell Knowledge Network entitled State of the Industry Research Series: Customer Loyalty in Retail found that 81% of loyalty members don’t know the benefits of their programs, or how and when they will receive rewards.

 

This is another critical issue seen in most loyalty programs. So the customers abandon the program because they don’t really see a point in it. Make sure they get a comprehensive idea about how your program works for them during the on-boarding process. Or, better yet, give them points in exchange of achieving educational milestones such as tutorials which teach the loyalty point accumulation process. Also, when you make any design changes, make sure your customers are informed of it so that they don’t get lost during the process.

Too much work for one point

The top reason customers – 57% of them – abandon loyalty programs is that it takes too long to earn a reward.

And worse,

70% of consumers abandon loyalty rewards because it takes more than six months to accumulate enough points to redeem rewards.

The ultimate consequence is your loyal customers abandoning you and switching to a different brand that has a better loyalty program which does reward them. The bottomline is, your customers decide to join your loyalty program because they trust you over the other brands – they trust that your customer service will serve them good always. So, don’t reward their investment of loyalty in your business unfairly. Don’t make them go through a complex process which will serve them nothing in the end. They will surely stay with you when they see the results of their engagement with your business.  

Now that you know the drawbacks your loyalty program might suffer from too, work on eliminating them and improving the program because – if used and maintained correctly – it can drive amazing revenue to your business. Check out the images below. (Also, continue to the end of the article if you’d want to know some more loyalty program related stats! Thank me later!)

Look at some more stats that will be useful in rethinking your loyalty program!

  • 50% of consumers said they were willing to give a retailer a second and third chance, with 50% abandoning brand loyalty only after the same mistake was made more than twice (SAP Hybris)
  • 28% of consumers are abandoning loyalty programs without redeeming any points (Capgemini)
  • 56% of shoppers say they changed or abandoned a purchase when they realized their points had expired (CodeBroker)
  • Loyal customers feel betrayed if a company misuses the information that the customers provided to it.  Nearly four out of five customers would abandon a favorite brand if the company used the customers’ personal data without first notifying them.

 

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