Peter DeCaprio: The three biggest mistakes in a company’s loyalty program you can avoid!

The travel and tourism industry has been on a continuous rise since the world of internet started to make its impact.   With this new development, customer experience of booking any service, hotel or an airline ticket online has made traveling easier and more accessible.    As society becomes more reliant on technology, everything from buying groceries at the store, order products online and book a flight can be done within a few minutes sitting at home.

This revolution in the market has caused companies to adjust their existing business strategy to accommodate with consumer demand.  One such example of this is loyalty programs that many companies have introduced as a means to retain customers and attract potential new ones that would eventually come back for repeat purchases or transactions.

When it comes to running your loyalty program, there are three major areas in which companies make a mistake in executing their loyalty programs.   

 Today in this article we will highlight the mistakes in these three areas and how to avoid them: Peter DeCaprio

1)    Inappropriate Rules of Engagement for your Loyalty Program

2)    Inappropriate Incentives for Customers to participate in your Loyalty Program

3)    Inadequate Reporting on Performance of your Loyalty Program.  

Inappropriate Rules of Engagement for your Loyalty Program:    

The first area or mistake that many business owners make is putting the wrong rules of engagement on their loyalty program.  Many company owners spend time thinking about what products or services they should offer as incentives through their loyalty program.    However, they forget to put rules around those incentives for customers to participate in their loyalty programs.

Many business owners who start a new loyalty program fail to execute the first aspect of running a successful loyalty program.  Execution of this step is crucial as it allows you to define how the program will run and what kind of transactions or purchases qualify for points or cash back rewards.    Without putting clear rules around your loyalty program, customers may be confused on how they can earn rewards from your company and there are chances that some may miss out on opportunities to earn rewards because of unclear or hard-to-understand rules.      With so many businesses being online today, the easiest way is to offer a web address which is simple and clear for customers to understand.  This way, you can highlight in your rules what transactions qualify for rewards that will help benefit the customer in earning rewards, instead of having them come back with questions or concerns.  

Inappropriate Incentives for Customers to Participate in Loyalty Program:   

Another mistake made by businesses today is offering incentives that are not relevant to their target market or don’t offer any value towards their business. No matter how attractive an incentive you offer, it’s useless if potential customers do not see value in participating in your loyalty program. For example, if you’re running a retail store selling luxury bags and accessories; it does not make sense to incentivize items like shampoo or toothpaste to encourage customers to join your loyalty program.   

Imagine if you’re trying to incentivize customers to sign up for your program while they are passing by your store, and you offer items that do not interest or benefit them in any way! This will not only make potential customers question the intent of your loyalty program but it may even drive away some of them. Also if you happen to offer an incentive which is not relevant to prospective or current customer demand, many people will take the time off their busy schedule just to get this deal.  However, when they get there at the store location ready with their coupon; it’s highly likely that they won’t find anything which interests them among the inventory because incentives may be limited or excluded. You may find them leaving your store in frustration with no intention of coming back again because they were not able to get the items that they need.

Inadequate Reporting on Loyalty Program Performance:     

Another mistake that merchants make is focusing too much on the design and aesthetics of their loyalty program instead of improving performance through analytics. As per Peter DeCaprio this happens when companies focus solely on designing a loyalty program without focusing enough on performance evaluation.    Business owners need to spend time evaluating what is working for their loyalty programs and what is not working in order to identify different areas where they can improve or expand upon.


 Business owners who want to start a loyalty program should put the following aspects in mind:

1.  Be very specific on what transactions and purchases qualify for points or cashback rewards       

2.  Offer incentives that are relevant and most importantly, offer value to customers                  

3.  It’s important to spend time evaluating the performance of your loyalty program and identifying areas where you can improve. 

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