When Loyalty Programs Go Wrong

MC: 0:00

Experience Action. Let's stop just talking about customer experience, employee experience and the experience of leaders. Let's turn ideas into action. Your host, Jeannie Walters, is an award-winning customer experience expert, international keynote speaker and founder of Experience Investigators, a strategic consulting firm helping companies increase sales and customer retention through elevated customer experiences. Ready Set Action. One, two, three, four.

Jeannie Walters: 0:31

Hello, hello, it's another Experience Action podcast. I'm Jeannie Walters and you are the ones who bring the questions, so let's go ahead and listen to our latest customer experience challenge.

Listener Question: 0:45

Hi Jeannie, I recently visited a store to redeem a reward from their loyalty program. Excited to use my discount, I presented the QR code from a past purchase receipt to the cashier. However, despite multiple attempts, the cashier couldn't get the QR code to scan. Even when he tried to manually input the code, it still wouldn't apply. This was frustrating, as using the discount was the main reason for my visit. This experience left me with a negative impression of the store's reward system, making me question its effectiveness and the overall customer experience. How can businesses ensure that their loyalty programs are not only enticing but also reliable and effective in delivering value to customers, thereby enhancing their overall experience and maintaining their loyalty?

Jeannie Walters: 1:32

This is such a great question because I think we can relate to this from the customer perspective. [Uh-huh] When we're dealing in loyalty programs, trying to collect points, trying to use those discounts that they send us, we are really activating loyalty for that brand. That's what they're looking for when they have these types of loyalty programs. So, as we heard from the voicemail now, this listener actually had something very specific happen. They actively went to a store to use a discount, to use some of those loyalty rewards that we all try to get. And when it doesn't work, it's not just disappointing, it's so frustrating. [Errrrr] It's so frustrating because you made a special trip, maybe you opted to go to that store instead of a different store to buy a similar product. So all of these things really add up to something that started with really good intentions that could actually lead to a negative touch point in the customer journey. So let's talk about it. First of all, let's think about what loyalty programs really are. Now, many organizations actually use them as marketing tools.

Jeannie Walters: 2:52

Some goals around loyalty programs are actually around getting new customers in. This is the game that we see in hospitality and airlines when they start announcing that they're doing things differently, they want to attract different customers to come over and try their brand, because they know that for those types of programs people will make different shopping choices. I'm guilty of this as a traveler myself. I go to my preferred airline because of the points. I try to look for rooms in hotels where I am part of the loyalty program so I can get the benefits, even if they're small perks like a bottle of water when you show up. That matters. So, there are certain ways that these really do increase retention, increase that stickiness with customers. But when they go wrong, they can really lead to not only that feeling of "hey, I didn't exactly get what I wanted, but it's a feeling of being duped or deceived that customers report on this.

Jeannie Walters: 4:02

One of the biggest complaints about loyalty programs in general is that it takes too long to get the reward. People work hard, they spend a lot of money, they show up a certain number of times, they remember that punch card and they get to that point where it's finally time to get that reward and it doesn't work. [Not workin'] So we have to be really thoughtful here. We have to really consider that part of the customer journey. It can be incredibly frustrating. So let's talk about loyalty programs as not just a way to attract customers, but also really a reliable way to deliver value along the customer journey. I loved the way that this listener actually phrased that question about how can we make sure it's reliable as well. So we know loyalty programs can be a powerful tool. Some studies actually show that 75% or more of consumers are likely to make another purchase after receiving an incentive. So once you receive that reward, it becomes something that you want again. So you keep purchasing to get there.

Jeannie Walters: 5:10

But the magic of loyalty programs isn't just attracting customers. It's really about keeping them happy, engaged and ultimately loyal to your brand. So when that happens, we have a relationship with that customer. We've made certain promises as a brand and organization and in return they're basically saying hey, if this goes well, I will stay loyal to you. I will make that special trip to the store to use that discount based on the loyalty program.

Jeannie Walters: 5:42

So let's talk about the backbone of any good loyalty program, and that's really around technology. And the technology is there so that we can really recognize the right customer for who they are at the right moment in their journey. One of the things that I've noticed as an American Express card holder is, whenever I call in, they acknowledge how long I've been what they call a member, not even a customer. So the longer it gets, the more they really recognize it and appreciate that loyalty. Small things like that can really make a difference. And the only way they are capable in doing that is by having the right technology, so they know it's me when I call, they know exactly how long I've been a member, and the processes to back that up. They've been trained to acknowledge the number of years that I've been a member. All of that is possible with technology that focuses on the customer data that we want to share in those moments. And what are the processes and trainings and procedures that employees have to embrace in order to deliver that part of the experience.

Jeannie Walters: 6:53

When we use things like QR codes that have to be scanned or links or anything like that, one of the things I've seen is that these are put into what I call "set it and forget it mode. So we set it up, we get very excited about it and then we don't test it anymore and we run into these issues because we haven't really taken the time to not just test the whole process but also figure out from the beginning, be proactive about what will happen if. Now, when we're conducting customer journey mapping sessions, this This is one of my favorite questions: questions"what what would happen if there's a problem. What would happen if the technology doesn't work? Because then you can create processes that employees are aware of. You can create things that happen, that trigger the next step, instead of just leaving people stuck there not getting the discount. So maybe part of this issue could have been solved by having an employee really understand that, you know what, I am empowered to give this discount because I see that they have the right code. Now, yes, there are ways customers can game those things if we're not careful, but we would like to think that this isn't something that would happen again and again and again, and if it did, that's something you have to fix. But I would say, in this specific incidence, I would want to make sure that the employee knows that there's another way to do this. So it sounds like the employee really tried to manually enter that code and it still wasn't working. Well, there has to be another way to check. There has to be maybe a way to just give the customer the benefit of the doubt.

Jeannie Walters: 8:34

If you have a customer who is in a loyalty program with your brand, that means that they've already put in the effort. They have already made the right amount of purchases to get that discount. So I think recognizing that sometimes we just have to honor things is really important. The other place I've seen this is when you show up, sometimes at a sports arena or an airport or a hotel and they have maybe a Starbucks or something like that on property and you walk in and they don't recognize your rewards there. They don't recognize your program there. Now, sometimes we've learned to be accustomed to this because we understand now that maybe it's not part of the global brand, it's more of kind of a leasing situation. But I also have seen customers get very upset about this and it puts the employees into really bad situations.

Jeannie Walters: 9:34

So if you are partnering and the loyalty program is not part of that discussion, I would say you're missing an entire part of the customer journey. So if you're rolling out different programs, if you are creating different partnerships, you have to think about the loyalty program and what you've already promised customers and what they will be expecting as customers when they walk in there. So make sure that you're really thinking about what are the issues that could impact customers and how can you proactively design around those things. Now, the backbone of all that has to be that technology to put the pieces together, to put the right data into the right place for the right person, to make sure that we can deliver the experience that we promised.

Jeannie Walters: 10:20

So what if something goes wrong, which it can? It's really important to be transparent and acknowledge the issue with those most loyal customers. Now, I'm sure some of you have seen this, where you get a weird email or something happens where maybe you didn't get the points you deserve. So if something happens where it's en masse, it's happening to all your customers, it's very important to get out in front of that through social media, through email communications, through texting, whatever vehicles you have, to let those people know that you know what something's not working, we're working on it.

Jeannie Walters: 11:00

If it happens to an individual, which does happen, it's also really important to acknowledge that it didn't go exactly right. I'll give you an example of this. Sometimes we don't get those points from the hotel after staying there, or we don't get those airline points that we so need in order to build up those points for the loyalty programs. Sometimes that means we have to submit a form. We have to show the receipts, all of those things. Now that's all fine if it gets resolved. But even if it gets resolved, I, as the customer, had to take extra steps because something didn't happen. So I would also recommend if you are dealing with one of those things, if you are trying to resolve an issue with the customer, make sure you acknowledge that and say I'm sorry, this didn't work out the way it should have. Our loyalty program should have worked better. [Sorry about that.

Jeannie Walters: 11:53

Those small statements can go a long, long way and really acknowledging that the customer had certain expectations and we did not live up to them. We did not keep our end of the promise in that loyalty program. It's a great way to really prove that you are walking the talk around customer experience and not just talking about loyalty in these big sweeping ways. Now the last thing I want to really focus on is personalization, because my version of what I want from a loyalty program might be very different than yours and there are more and more options available now where people can really choose how do you use the points or the dollars or the discounts for a better experience that you want as a customer. Now, again, I'll say that hospitality has really led the way on this for a long time. Now they've said hey, would you like a room by the elevator or a room down the hall, do you prefer to be near the gym or do you prefer to be near the pool? And so by asking those small questions and letting customers really set up profiles, then you can really use that to incentivize differently.

Jeannie Walters: 13:05

I have a friend who is a big traveler, big spender, just loves staying in luxury hotels. And one of the things that drives him crazy is that he does not drink alcohol, not his thing, and what do they do nine times out of 10 when they want to welcome him to the hotel? Well, they call, they send up a bottle of wine or a bottle of champagne. Now, at the surface that's a very nice gesture, but it shows that they don't really know this person, that they could really personalize that by saying what is your beverage of choice? He would love a bottle of Perrier, so send up a bottle of Perrier instead.

Jeannie Walters: 13:49

So when we look for really what does loyalty mean? We have to get clear about who are we delivering those incentives to, and make sure that we're acknowledging and respecting the individual person that they are. And the only way this all works is if we have a continuous loop of feedback with our customers. Find out what are the incentives they would care about. What does loyalty mean to them? How can we personalize their experience and keep them loyal longer through meaningful programs and not just what everybody else is doing? And the more that we can do that, the more that we can have that continuous feedback loop, the more ahead we can stay of our competitors.

Jeannie Walters: 14:34

So this is really about making sure that we're listening to customers in the right way and we're setting up loyalty in the way that is most meaningful to them.

Jeannie Walters: 14:44

And when things go wrong, we have to acknowledge that. We have to make sure that we not only have what goes well, but also what is the plan for when things don't work according to that plan. Great question, because loyalty programs really are a powerful way to show customers you care and to improve retention when they are done well. But we need to make sure that they are reliable, that they are not just an enticing promise but something we can deliver on, and that we're building that lasting relationship with the customers who want to be loyal to our brands. I am so pleased that you are here with me again at Experience Action. I love answering your questions. Don't forget, you can leave me a voicemail at askjeannie. vip and we will have another great question from one of you, all about customer experience, next time on the Experience Action podcast. Thanks for being here and I'll see you next week.