Rampant discounting, promotions and the ever-present “points” have soiled the ability of loyalty programs to drive retention. This decline is directly attributable to the rise of templated, standardized loyalty programs with zero brand specificity. Their sheer volume has dulled the senses of consumers and damaged the ability of all loyalty programs to drive behavior.
Simply put, templated loyalty programs don’t work.
Consumers have come to expect the offers and perks that loyalty programs offer, and an air of entitlement has settled in the marketplace. Consumers now expect all the retailers they patronize to provide them with points, perks and special coupons. In a word, consumers have lost the concept of modifying their behavior to acheive a specific reward. Entitlement and expectation have replaced exclusivity and excitement.
According to a recent Financial Times Article, even once-loyal customers are switching brands in droves. With increased switching behavior and decreased offer sensitivity, loyalty programs are failing to drive retention and failing to generate a return on the investments they require.