Four Signs Your Loyalty Program Needs Updating

Declining loyalty, gaming the program, franchisee complaints and a conflict with corporate objectives are top indicators that change is due.

September 08, 2016

NEWTON, Mass. – Paytronix Systems Inc. identified four signs a loyalty program is ready for an upgrade: declining loyalty, gaming the program, franchisee complaints and a conflict with corporate objectives.

The new research brief, “Extracting Customer Insights from Big Data: Is It Time to Change Your Rewards Program?” explains how retailers can evaluate their loyalty program’s effectiveness in meeting two primary goals: driving members to visit more often and to spend more when they do visit.

“If your rewards program doesn’t adhere to core design principles, it’s probably not built for success,” said Lee Barnes, head of Paytronix Data Insights. 

According to Paytronix, here are four signs to look for:

  • Declining loyalty penetration and new member enrollment.
  • Evidence that customers are “gaming” the program to their advantage.
  • Franchisees and operators increasingly complain that you’re just running a discounting program.
  • Your program is con?icting with your corporate strategic objectives.

The report also explores changes Starbucks made to its loyalty program in the spring of 2016, noting a number of warning signs that it was time for enhancements. Although controversial, many customers liked the new direction of the program, while others protested the change. Some analysts predicted that Starbucks would lose program members, but the membership is actually growing. The company reported a 16% year-over-year membership growth in Q1 of 2016 and an 18% year-over-year growth in Q2. 

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