Rewards schemes failing to engage customers?

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By: Wise Marketer Staff |

Posted on March 6, 2008

Although nearly 90% of American shoppers participate in rewards programmes to earn points, discounts, or prizes, these programmes alone don't often foster the kind of emotional connection that is needed to develop long term customer engagement, according to a survey and white paper by Allegiance.

The company's white paper, entitled 'Buying loyalty: Do rewards programmes translate into customer engagement?', explores the possible link between loyalty/rewards programmes and long term customer engagement, and offers a number of suggestions for engaging customers to help reduce the dependency on the presence or absence of rewards.

Communication is key
According to Kyle LaMalfa, Allegiance's best practices and loyalty expert, "To connect with customers hearts and minds, companies need to encourage two-way communications and create a convenient way for them to express their comments and concerns. Engagement programmes work hand-in-hand with loyalty programmes to strengthen the long-term bond between the customer and the brand."

The paper also examines three criteria used to determine the effectiveness of rewards programmes, as follows:

  1. Cost justification
    What does it cost to run loyalty programmes? If a company gains more than it spends on managing a loyalty programme, is that a good enough reason to operate the programme?
  2. Using data
    How is the rewards programme's data being used? Is it being used to improve the organisation, the rewards programme itself, the customer experience, or all of these? Perhaps most importantly, is the rewards programme's data being used to retain customers?
  3. Programme evolution
    What has the company done for its customers recently? Once you give customers discounted or free goods, what will they want next? A serious but often-overlooked question is whether or not companies can afford to keep giving things away to win short-term sales.

Adding value for the customer
Rewards programmes can certainly add value to the customer experience, but in themselves they can't easily create the level of emotional attachment that causes true customer engagement with the brand, the white paper concluded.

Engagement is something that can only be built over time, and it usually stems from mutually beneficial relationships between customers and the brand. One of the keys to creating this kind of relationship, Allegiance suggests, is providing customers with direct access to company decision makers though a feedback management system, thereby proving that the company really is listening to their concerns.

The full white paper has been made available for free download from Allegiance's web site - click here (free registration required).

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