HBR Lists the Reasons Why Loyalty Programs Can Fail
Loyalty programs can make or break a brand. While some programs become billion-dollar assets (think airline miles or Sephora’s Beauty Insider), others drain resources and leave customers disengaged. So, what separates the winners from the money pits?
The report of loyalty program’s death was an exaggeration.
In a recent Harvard Business Review article, experts outline why many loyalty programs fail—and how to fix them.
The Big Problems
- Broken Economics: Programs often cost more than they deliver, using outdated rules or incentives that lower profits instead of boosting loyalty.
- Poor Customer Insight: Many companies misread their customer base or fail to gather the data they need to personalize offers effectively.
- Low Engagement: With the average U.S. consumer juggling 12 loyalty programs, it’s hard to stand out—especially when rewards are forgettable or meaningless.
The Blueprint for Success
To thrive, loyalty programs need:
- Deeper customer profiles for better personalization.
- Valuable incentives that match what customers truly care about, whether it’s convenience, exclusive perks, or gamified experiences.
- Community-building efforts to create organic ambassadors for the brand.
From Amazon Prime’s ecosystem to Delta’s credit card partnership with AmEx, the best programs don’t just reward—they captivate.
Is your loyalty program future-proof? Reach out and we’ll be happy to share our thoughts.