Vendors that rely on rewards programs to keep customers in the fold are discovering that even so-called satisfied customers can easily churn. Research shows these customers will go elsewhere for a slightly better deal or more points demonstrating that their loyalty is often to their rewards and not to a brand. Fixing this problem can be as simple as better understanding what customer behaviors are being rewarded and adjusting your rewards programs to recognize truly loyal behaviors.


Rewards programs that provide points, coupons, or discounts for purchases teach customers that the only behavior that counts as loyal is buying a product. But other behaviors that support a brand in the market like defending the brand in social media, advocating for the brand to prospective customers, writing knowledgebase articles to name a few, can be much more valuable to a vendor. The behaviors you decide to reward are as unique as your customers and brand which makes copying someone else’s rewards program a waste of time.


Each vendor will have a loyalty sweet spot. Some need frequent repeat business because they sell low cost, high volume products but others may sell things that people or corporations buy relatively infrequently. In either case, having customers behave in ways that demonstrate their loyalty should be rewarded. If you take this approach you might find that you are giving away less but receiving greater benefit from better targeting.


How to craft a loyalty program that lives up to its name

1.    Revamp your rewards program by concentrating on what you reward. It’s still a good idea to reward customers but a little praise or a thank you can be as effective as more points. Also be aware of how a reward affects customer behavior. Sounds simple but current rewards programs focus on rewarding purchase behaviors instead of loyal behaviors like recommending a friend or defending the brand on social media.


2.    Engage customers. When customers participate in your outreach by recommending your brand in a community or on social media, writing knowledgebase articles, suggesting new products or fixes for older ones, they are engaging in loyal behavior. You should reward this.


3.    Don’t bother with delight. Even companies that say they want to delight customers fail to do so according to the latest research. Your idea of delight isn’t necessarily your customers’. Other research shows that many customers just want an efficient experience so that they can get on to the next item on their list. So make that easy.


4.    Be competent and authentic in moments of truth. Start by knowing what your moments of truth are—those times when you have to come through with information, assistance, or a transaction. Many businesses that fail at customer loyalty do so because they don’t understand customer moments of truth and thus fail to engage. To find your moments of truth just ask your customers, they want to tell you.


5.    Explore community as a way to engage customers with your brand and with each other. It’s low cost and has numerous benefits including:


a.     Revealing new needs and opportunities.

b.    Discovering pain points before they become deal breakers.

c.     Providing authenticity as experienced users explain your brand to newcomers.


6.    Map your customer journeys. Journey mapping enables you to model your relationships and helps you avoid those missed opportunities or moments of truth than can lead to a disconnect.

Inspiring customer loyalty isn’t hard. It starts with engagement and many vendors are realizing that they just haven’t been engaging. These six steps will help you improve your loyalty outreach while saving points and discounts for when you really need them.


About the Author

Denis Pombriant is a well-known front office analyst and thought leader.  He is the founder and managing principal of Beagle Research Group, LLC. In Denis’ new book, You Can't Buy Customer Loyalty But You Can Earn It, he teases apart customer rewards programs and shows that they are not generating the loyalty that their sponsors need. Loyalty and rewards have a common root but they are fundamentally different. In this concise analysis Pombriant identifies what loyalty is in the modern marketplace and gives clear advice about how businesses at all levels can work to improve their loyalty results and drive greater revenues, better retention and enable customers to be happier about their vendor decisions.

Pombriant’s other work appears in most major CRM publications both in print and online, in both North America and Europe.  His last book, Solve for the Customer looks at how vendors can better engage customers by leveraging Customer Science.  Pombriant is always working on a book and he maintains an active research, writing and speaking calendar.  He lives and works near Boston.