It is likely that your brand has a loyalty program but has never taken great advantage out of it. Why?
Have you ever noticed that, even though your company has got an individual loyalty plan, sales and customer loyalty have stagnated? No wonder. This happens due to what we call ghost points, points with a very short-term of use which often end up not being used and expiring.
While brands insist in making residual offers to customers, they are still going to be attracted by them but not for much time because they soon realize the benefits are more virtual than real. Points often disappear a month or two after they have been accumulated, producing a sense of injustice and frustration in consumers.
Ghost points’ consequences:
1. Short-term loyalty
On the one hand, short-term points can lead customers to buy more in less time. On the other hand, the relationship between clients and brands will certainly be harmed. No one likes to act as a loyal client and then see their confidence devalued. Even if these loyalty programs seem to be beneficial for companies, in a short period of time customers realize they were cheated and end the relationship without thinking twice. These situations are negative for both parties but as the consumers look for a better option, brands lose a customer and will have more difficulties in acquiring a new one for sure.
Are companies willing to pay this price? Is it worth retaining a client for two months and then deliberately destroying the relationship? What have you earned from this situation? Note that this does not mean points cannot expire. Instead, the expiration period should be defined in a way that customers have all the possibilities to use them. Additionally, clients should be warned in advance about this so that they do not feel cheated and have the possibility to be rewarded for their spending.
2. Less valued rewards
If a customer is loyal only for a few months, what advantages can you get out of this relationship? Few or none. Consequently, the rewards offered will be of low value for the consumer while the company guarantees a loyal customer for a very limited time. This way your brand will end up not benefiting from a long-term relationship and the financial (and not only) gains that would come with it. Is it worth winning for a limited time when the only guarantee you have is an unlimited loss?
3. Competitive disadvantage
As soon as your customers realize that the loyalty program seeks to increase consumption by expiring the points before they can be used, the most obvious reaction will be to give up. They will feel cheated because due to their presence in that program they have spent more than usual while expecting a reward. When the reward does not arrive, the easiest thing to do is to end the relation and look for credible alternatives. Certainly, there will be other companies whose loyalty service offers bigger advantages and it will not be difficult for the customer to join one of them after such an experience. This is the problem of short-term points: the consumer/company relationship is initiated at short-term, even if the customer does not know it. Ultimately, the only ones benefiting from this situation are your competitors.
Leave A Comment