Retail reward programs no guarantee of customer loyalty

IMG_7981Most retail organizations use discounts to entice customers to buy their merchandise at the end of each season, but that doesn’t do much to guarantee a shopper will ever return to a store or even garner customer loyalty. Retailers spend billions of dollars on loyalty programs which are designed to bring customers back for repeat business, but a recent poll by Crossview, an organization designed to optimize consumer experiences, revealed that 66 percent of consumers responding to a survey about loyalty programs do not shop at a particular retailer despite promises of earning points for future purchases.

Loyalty programs started as far back as 1896, when stores would give out “green stamps” that could eventually be redeemed for household products. Very popular in the 1930s through the 1980s, supermarkets and other participating stores would give out stamps commensurate with the purchase amount, and the stamps would be pasted in collector books. Each book would be completed when 1200 point stamps were collected, and the popular catalog with all the great reward choices became a family’s favorite pastime.

Today most people have at least one loyalty card, but the constant barrage of worthless emails and low-value rewards  have people  discontinuing the programs. Most consumers don’t want to spend the time figuring out the value of points and a reward that may take months if not years to earn.  Who wants to read about useless offers when they open up their email?  Shoppers want immediate benefits; in other words there has to be a program that keeps customers engaged, and shoppers want the programs to make a substantial difference; make it worth their while.

Rodney Clark, a ladies clothing retailer  uses a VIP customer Endless Rewards loyalty program which gives back something to a customer for every purchase they make. Customers have the choice of either the gold or platinum level which entitles the customer from 5 percent to 10 percent discounts for each purchase. According to a store spokesperson, customers spend an average of $100 more per visit than non-VIP customers. Nordstrom’s Fashion Reward program gives cash back and offers private and exclusive shopping experiences to cultivate customer loyalty and incremental sales. Target stores refund 5 percent of every purchase when a customer uses a branded credit or debit card.

Only if the reward programs show customers they are important and allow customers to view the program as valuable, relevant, and exceptional will customer loyalty increase. Retailers spend billions of dollars on loyalty programs and hope that it brings customers back. Stores do need to remember that consumers want immediate benefits, transparency, good prices, great experiences, and exceptional service. Now if the retailer happens to offer another 10 percent discount  just for presenting a  reward card – that’s just another plus.

photo credit: CLF

One Response to “Retail reward programs no guarantee of customer loyalty”

  1. David S. said:

    Feb 26, 12 at 1:56 am

    A new customer loyalty concept businesses are starting to use is providing codes/cards to customers after every purchase. The difference is that the codes are entered online via 3rd party web-based loyalty program (Cinco Squared). The customer then hits a button and watches images of prizes go through a cool sequence and one is randomly chosen. This page is branded with the business logo, etc and prizes are completely customizable with anything a business wants. What is great about this is that businesses can define the odds of each discount/prize. The chance to win a big discount or prize is very appealing to customers. The ability for businesses to throttle discounts makes this a much more profitable program. Other features like collecting customer email addresses and the ability to run multiple discount tiers is pretty slick. Cinco Squared is probably the most affordable program available.