Relationships, Not Rewards, Are Key To Successful Loyalty Programs

Consumers’ overall engagement in traditional loyalty programs has declined consistently over the past four years and retailers are looking to refocus their loyalty initiatives to compete more effectively.

While total loyalty program subscriptions peaked at 2.65 billion in 2012, the overall percentage of active memberships slipped from 46 percent in 2010 to 44% in 2012, according to COLLOQUY research. The average U.S. household participates in 21.9 loyalty programs, but less than half, or only 9.5 of those memberships, are active, COLLOQUY reported.

In the past, points programs, discounts, punch cards and rewards played starring roles in loyalty initiatives. But industry experts are finding that these tactics no longer affect consumers’ overall loyalty to a brand or retailer.

Tiers and thresholds also have been a staple in programs. If consumers reach a specific spending threshold, they reach a new program tier or level. Although these formats are supposed to tout different types of offers, incentives and even exclusive events, 32 percent of consumers do not know what tier they belong to in their favorite loyalty programs, according to another study from COLLOQUY.

The study verified that a gold, silver and bronze tiering system — which many retailers implement into their loyalty programs — creates more confusion for customers instead of improving their experiences.

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