September 21, 2018
Remember when Starbucks made changes to their customer loyalty program and it resulted in a 50% plunge in customer perception? If stories like that make you hesitant to make changes to your customer loyalty program, don’t fret. Sometimes, change is necessary and benefits your members so it’s all in how you position and communicate the changes.
In this post, we’ll share tips on how to communicate changes to your customer loyalty program without experiencing negative backlash.
Why change your customer loyalty program?
Before getting into the “how” of making changes to loyalty programs, let’s talk about why you would consider making changes in the first place.
There are a few scenarios that may indicate you need a change to your loyalty program:
- Your loyalty program is not positively impacting your bottom line. You’ve run the numbers over and over, and no matter how you crunch them, your loyalty program just isn’t encouraging members to spend more with your brand. If this is the case, it may be time for a new loyalty program.
- It doesn’t reward your loyal customers – The purpose of a loyalty program is to reward your best customers; the ones that visit most frequently and that spend the most with your business and/or act as brand advocates. If your loyalty program is handing out freebies to promiscuous discount-driven customers that come and go, it’s time to revamp.
- Your program is too hard to track – With all the innovations in customer loyalty technology, it doesn’t make sense to hand out punch cards anymore. You need a platform that can provide you robust customer data that is easy to understand and take action on. If this is you, it’s time for an update.
Updating your customer loyalty program will help encourage customers to visit more frequently and spend more when they come to redeem rewards. And, it will motivate customers to spend faster and more often to earn rewards in the first place.
Now that you know why you would make a change, let’s talk about how you can make changes to your loyalty program without bumming out your customers.
5 tips for communicating changes to your customer loyalty program
1. Give, don’t take
Sephora has historically had a great customer loyalty program. Members of the Beauty Insider program can accrue points and redeem them for cool freebies. Freebies include anything from a small mascara for 1,000 points to free passes to city festivals for 50,000 points.
Sephora regulars often save points to cash them in for bigger prizes. As such, it didn’t come as much of a shock when customers were up in arms when Sephora announced a change to the Beauty Insider program. Sephora changed the program and made it so points expired if a member didn’t use their Beauty Insider account for 18 months. These points previously had no expiration date.
While it’s easy to see Sephora was aiming to increase how often customers purchased and didn’t want to the liability of points sitting unused forever, it backfired and was a huge turn off for customers.
Takeaway: If you’re revamping your loyalty program, make sure you understand how your audience will perceive the change and ensure there is a benefit for both sides when possible. Or, consider “grandfathering” in existing members and only apply the change to new members.
2. Focus on communication
Even if your customer loyalty program is getting 100 times better, you may have consumers who like things they way they are. After all, humans are creatures of habit.
To help convert these customers to your new program, it’s important to take charge of the narrative well before you launch. This can include sending out email messages that something exciting is coming. You can also use your social media channels to announce upcoming changes. And of course, nothing beats face-to-face communication, so ensure your staff is well-versed in what is happening so they can get your members excited.
Takeaway: Communicate to members before, during, and after to prepare them for change.
3. Make the change easy
Sometimes loyalty members aren’t necessarily afraid of a new rewards program or even changes to an existing one, but they may be worried about the changes that come with utilizing new technology. For example, you may have a set of customers that aren’t as keen on mobile technology, and they may be worried about using an app vs a punch card.
Instead of throwing these customers to the wolves and hoping they figure out, this is a great opportunity to build a relationship and inform them that joining is simple and nearly effortless. Your staff plays a pivotal role in getting customers on board by extolling the benefits of the program and encouraging customers to enroll.
Let customers know exactly why the program is going to be better, how they will benefit, and why you are pumped for them to start earning more with your brand as soon as the new program launches.
Takeaway: Train customers on how to make the change, so it’s easy.
4. Get feedback
Never underestimate the power of customer feedback, especially when it comes to your customer loyalty program. You can gather feedback from customers about what changes they want to see, what’s working, and what’s not working. As you make changes based on their suggestions, chances are higher they will use your new program and remain loyal to your brand.
Fostering loyalty through feedback is especially important considering, on average, loyal customers are worth up to 10X as much as their first purchase. And, 61% of SMBs report that more than half of their business comes from repeat customers.
The second thing gathering feedback from loyal customers does is help prepare them for change as well as involve them in the process. When repeat customers play a role in restructuring rewards, it’s empowering.
Takeaway: Ask your top customers for feedback before making changes.
5. Test changes
You don’t have to overhaul your entire loyalty program all at once. In fact, it’s often better if you make small, incremental changes. Why? Because it gives you an opportunity to test your changes out, gather additional feedback, and craft a loyalty program that works for your brand and your customers.
As you roll out new program features, use the data you capture in your program to track engagement, optimize your program based on performance, and tweak as needed. This method will help you identify low engagement perks and permanently adopt high performing ones.
Takeaway: Use performance metrics to see how customers are responding to your rewards program. Then, make changes as necessary.
Change can be difficult for everyone, and your loyal customers aren’t immune, no matter how much they love your brand. If you are planning on overhauling your customer loyalty program, check your motivations. Make sure you are looking for ways to reward your best customers while increasing revenue and generating positive ROI for your business. That’s smart growth and smart change.
When you’re ready to make some changes, take the time to communicate the changes properly, make it easy to make the change, ask for feedback, and test your program as you roll it out.
To learn more, get our free Customer Loyalty Buyers Guide.