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Trouble in Paradise? How to Reignite Customers' Interest in Loyalty Programs. Companies shouldn't take advantage of consumers who trust them with their personal information.

By David Andreadakis

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From the moment a consumer says "I do" to a brand's loyalty program, a special bond between the two begins.

Loyalty program membership creates a closer, more intimate brand connection. Consumers are opening their hearts, minds and wallets to their brand of choice by sharing information about their shopping habits and personal financial data along with insights into their lives that influence how they spend money and, ultimately, how they are marketed to.

This relationship shouldn't be one sided. There's an element of give and take. Consumers offer up their personal information in exchange for perceived value and an understanding that brands won't abuse that knowledge or overwhelm them with irrelevant offers at all hours of the day delivered on the wrong communication channels.

Too often, though, loyalty programs make for less than ideal partners. One of the most common signs of "relationship trouble" and a diminished loyalty experience occurs when consumers receive offers and rewards that have nothing to do with their current lifestyle.

Related: How to Dominate Your Competition With 'Reciprocal' Customer Loyalty

Another area where some brands fail is setting unachievable tiers; those levels within loyalty programs often called platinum, gold and silver. If you are an airline or hotel loyalty program member, you've probably received some type of communication that reads: "Congratulations on your continued membership! You're only 19 stays (or flights) away from a free night/flight?"

Another significant loyalty program mishap is unbelievable promises. Often this comes in the form of over-the-top discounts that are built on over-the-top prices. Armed with smartphones and product research, consumers have a sense of bogus discounts. A price hike followed by drastic cuts isn't a discount. It's a marketing ploy.

When it's time for "relationship counseling." Short of a customer's loyalty account going inactive, there are additional signs of trouble.

Cashing out is perhaps the most obvious. That's when consumers make sudden changes in their loyalty program behavior. Rather than earning that free flight to New York, they cash in their points for free magazines or priority boarding -- anything to maximize their short-term loyalty experience. It's kind of how customers act at a fire sale or a going-out-of-business promotion. They grab what they can on the way out.

The bottom line is that sudden shifts in customers' buying habits are potentially causes for concern. Here's what to look for:

  • Has customer spending decreased?
  • Have the types of product purchases shifted from luxury to necessity, for example free flights versus free magazines?
  • Have expensive single items been replaced with several smaller products?
  • Has their social media activity and brand engagement reduced, stopped completely or become negative?
  • Has in-store visit frequency fallen?

Related: How Gamification Can Improve Customer Loyalty Programs

Caught early, however, many of these warning signs can be reversed. One of easiest starting points is to remember that sometimes none of the above challenges are what's driving customer angst. It could be that customers, bombarded with multiple loyalty program offerings, are feeling overwhelmed by the overall loyalty experience. They've learned the program's rules and earned rewards, but are no longer interested.

Renewing your loyalty vows. Reigniting a consumer's brand passion comes down to being sincere and transparent in your loyalty program's intentions and rules. Unlike shopping behaviors and lifestyle habits, this is a difficult concept to measure and even harder to implement. Brands must find genuine ways to engage and excite their customers, again and again. But they must do so respectfully, reliant on the customer data they've been given permission to use.

Successful loyalty unions, like successful marriages, are about sharing, respect, reciprocity and renewal. Cheating on your loyalty program (shifting from one hotel loyalty program to another, for example) is never ideal and data abuse can severely diminish the brand-consumer passion felt during the relationship's honeymoon period.

Since February is traditionally the season of beginnings, consider renewing your vows by rekindling that special brand-consumer connection. Offer something new that sparks consumer passion, reignites their loyalty love and sets them on a path of continued brand commitment.

That might not be as poetic as "'til death do us part," but it's an important start.

Related: Hotel Loyalty Programs: Loyalty Not Required

David Andreadakis is the vice president of Loyalty Strategy, responsible for the loyalty strategy and business development at Kobie Marketing. Andreadakis has extensive experience analyzing the strategic and financial aspects of loyalty strategy and program development for clients and their customers, as well as providing insights that will help enhance Kobie’s design, analytical, behavioral and platform offerings.

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