Tips to Avoid Limitations & Complexity While Building Loyalty Points System
- Posted on August 16, 2023 by Robert
- Reading time about 6 minutes
We all know the increasing demand for loyalty points system, which has become a necessity for brands to retain their customers for a long time & witness better business growth. Among all the loyalty program types, the loyalty points system is the most common one that has become increasingly prevalent with benefits to both brands and customers. However, with stiff competition in the market, having a mere loyalty point program is not sufficient to gain a competitive advantage, which is why addressing their program flaws is a must.
In this blog, we will find out what we need to learn about Customer Points System and its potential problems along with solutions to overcome them with ease.
Common Loyalty Program Redemption Issues & Solutions to Overcome Them
Whether you are planning to build a Rewards Program For Small Businesses or big enterprises, it is crucial to keep in mind that your program helps in overcoming challenges associated with the redemption of loyalty points. More than 50% of customers often struggle while attempting to redeem their rewards even after accumulating points over time.
Let’s find out how challenges like limited redemption options, complex rules, unclear conditions, high thresholds for redemption, etc. arise and solutions that can help to overcome them.
1. Limited Redemption Options
Having a restricted range of redemption options such as services or products can be frustrating for many customers that are using your loyalty points system as they don’t get access to desired reward options that align with their preferences or interests.
Talking about renowned loyalty programs such as Qantas Frequent Flyer & Velocity, we know that these brands offer an amazing range of reward options like redeeming points for booking flights or buying physical goods like bracelets. Another example of a loyalty program is Telstra Plus where members have a limited range of electronic & technology items to redeem upon.
Customers today are smart & they take time to understand the points value associated with the actual cost. As we know points value is also a form of currency, every business must keep the focus on setting the right currency exchange. For instance, $1 is equal to 100 points or 1000 points. It is important to ensure that the right value of the point is kept while designing the program & where customers can use them.
Some factors that businesses must consider regarding redemption-
– Seamless accrual process for points earned by customers & inclusion in a separate liability ledger till redemption
– The value amount attributed internally by the business for each point
– Ensure that the value proposition for redemption help in building positive engagement with program members
– Keep the focus on the redemption rate & know what is driving it.
Knowing the value that drives your members’ behavior & ensuring that your program meets the business goals and expectations is crucial.
One effective solution that can help overcome this limitation is to expand the range of redemption options that meet their customer’s needs and expectations of your loyalty programs. This can be done by collaborating with a bunch of partners across various industries such as coalition alliances through affiliates.
As every customer has unique needs, loyalty programs must offer a wide range of rewards that help to cater to a wider audience and improve the customer experience. When businesses partner with one another, they help each other unlock B2B and wholesale discounts, which can enhance business goals with an opportunity to increase the number of redemption options for both partners.
2. Unclear Redemption Rules
Another issue usually faced by customers is the complex rules and conditions of loyalty programs that restrict customers to engage with programs more often. These frameworks include different aspects like unclear expiration policies, blackout dates and confusing tier structures creating problems for customers while navigating the program.
The only solution to the above challenge is to keep the program simple. By simplifying the rules and conditions of the program, you can help in enhancing the customer experience with the help of clear and concise guidelines promoting better transparency and easy understanding.
To help automate & streamline the program process, brands can make use of innovative technologies, which can be helpful to reduce customer retention and frustration. Additionally, you can provide timely reminders regarding points expiry to build better connections with program members.
3. High Redemption Threshold
Here, we will talk about how high redemption thresholds can be disappointing for customers that aim to redeem their hard-earned points as they may find be extremely challenging to reach the minimum threshold. This leads to lower engagement and makes them lose interest among customers. For instance, there are luxury hotel loyalty programs that offer high threshold rewards that customers can redeem points for a 6-night stay minimum.
However, it has been noted that brands with high reward redemption thresholds may lead to a negative impact on the brand image. There is a high chance that customers might switch to other brands offering better options to fulfill their needs.
Keeping the redemption threshold low can help brands to incentivize customers & promote active participation. Making rewards attainable can make programs gain huge success and encourage customers to remain loyal. Another way to engage customers is to tailor individual customers’ spending habits with personalized services or offers that can help to motivate customers to engage more often with the program.
Segmenting customers can help brands provide more personalized offers that can influence redemption. For example, tiered programs provide benefits to high-spending customers to influence basket size.
Loyalty points systems have a long way to go as they have a huge potential to help in customer retention for brands. One of the main challenges that customers face is the problem associated with the redemption of their rewards. Making your loyalty program a grand success is possible through strategic measures such as the expansion of redemption options, simplification of rules and conditions, decrease of redemption thresholds, & more.
Businesses can overcome program flaws & challenges by implementing loyalty solutions that enhance customer satisfaction, boost brand loyalty, drive business growth, etc. Novus offers a reliable Loyalty Points System that enables brands across the world to build dedicated loyalty solutions to meet specific target audience needs & overcome challenges with ease. If you are planning to build a loyalty solution from scratch or redesign an existing one, connect with loyalty consultants & upscale your business with maximum loyalty opportunities.