1) Does your point-rewards loyalty program resemble those of your competitors?
Be aware that what your shoppers understand about your point-rewards loyalty program is that:
- they will be rewarded for the info they provide (personal info, shopping-behavior, etc.)
- they will be rewarded for their purchases
- the more they buy, the more they will be rewarded
In other words, from the point of view of shoppers, all point-rewards loyalty programs feel alike.
To make sure that the answer to my first question is “no”, retailers basically need to give out rewards that shoppers truly value, for example:
- modern/exclusive/experiential/… rewards (e.g. cooking classes, personalized items, …)
- priority lanes at check-out (saving time is *VERY*valuable for shoppers)
2) Are you effectively gathering knowledge about your shoppers through your point-rewards loyalty program?
To be valuable, a point-rewards loyalty program should significantly improve:
- knowledge about the shopper
Improving knowledge about the shopper:
- is hard and expensive (specific skills are needed, technology is complex, etc.)
- is essential (it’s pure “competitive-advantage”)
To make sure that the answer to my second question is “yes”, retailers need to invest the money necessary to successfully mine the data that point-rewards loyalty programs acquire: no investment, no point-rewards loyalty program ROI.
3) Are you encouraging cherry-picking?
The most fervent fans of point-rewards loyalty programs are “cherry-pickers”, shoppers who are likely to load up on low-margin deals while earning their points.
To make sure that the answer to my third question is “no”, retailers essentially need to:
- avoid creating and nurturing their own “monster” shoppers through futile promotions
- be aware that points programs may generate early indication of incremental sales gains, but in time they risk to erode margins without the benefit of progressive, substantial sales increases
A final, additional question: is your point-rewards loyalty program strengthening your brands/brand value?
If your answer is yes, you can be sure that your point-rewards loyalty program will have a measurable, decisive long term effect on your business.