How to Successfully Make Changes to a Loyalty Program

As brands and retailers work on their marketing plans for 2018, there are some major lessons to be learned from the loyalty upheaval we saw in 2017. Over the year, a number of notable brands, including Pampers, Target and Sephora, launched or rolled out changes to their loyalty programs, and they weren't received well by consumers.

Procter & Gamble’s Pampers brand launched its first ever loyalty program that offered customers loyalty rewards for purchases. In July, Target announced that it was endings its beloved Cartwheel Perks loyalty program, stating that a new program would be announced in the future. In the same week, Sephora announced that it put an expiration date on loyalty points, with unused points on inactive accounts expiring after 18 months. There had previously been no expiration date.

Unfortunately, in response, all three brands received backlash from their customers. Many members of Sephora’s Beauty Insider Rewards Program have threatened to take their business to Sephora competitors like Ulta. Consumers took to Facebook to voice their frustration with Pampers’ new app. One consumer posted, "This new app is a joke right? Pampers really dropped the ball on this one!!!! Epic app launch fail award goes to Pampers!!!!!"

It’s no surprise customers are upset, as 68 percent of consumers expect loyalty points for spending time in-store and repeat visits, according to Capgemini Consulting.

The high likelihood of upsetting customers by disrupting their expectations raises the question, why make changes to your loyalty program? Brands have loyalty programs in order to motivate customers to shop with their brand instead of a competitor’s, to spend more with their brand, and to spend with their brand more often. Yes, there's a desire for the program to build good will with customers, but it has to make financial sense for the business. Brands sometimes have to make changes to their loyalty program in order to fix poor design or financial modeling.

Consumers sign up for loyalty programs in order to receive rewards and cost savings for shopping. Most loyalty programs offer some type of incentive after a certain amount of money is spent, and consumers have understandably come to feel entitled to those perks. It’s no surprise that despite a rise in loyalty membership program enrollments, active participation in programs is falling, according to eMarketer. Taking something away from consumers is never received well, but ironically, it can be necessary in order to reset the program to make it better for both customers and the business.

So how can retailers prevent or minimize backlash when they make a change to their loyalty program? Below are a few measures brands should take:

Communicate, Communicate, Communicate!

Communication is key when major loyalty program changes are being made. Make sure to reach out to members before, during and after. Communications can include outlining the steps it takes to leave an old program, how to join the new one, and detailing the milestones. Brands need to be transparent and make sure to explain why the program is changing and show the benefit to the member without totally avoiding the corporate benefit.

Brands and retailers can effectively communicate by giving customer service teams scripts that they can get comfortable with prior to launch, as well as proactively publishing FAQs to members via email or website. It’s also important to communicate to internal employees and vendors with consistent messaging to help them understand that there will be negative feedback, and the reasons behind the program change.

Practice Makes Perfect

It’s important that all relevant teams are trained on the program prior to a launch. If employees understand how, for example, the points economy works and member benefits, they'll be more confident in answering questions and responding to feedback. Ensure that internal employees and vendors are on the same page about program messaging — consistency is crucial. It's also helpful to host role playing sessions leading up the launch so employees can get comfortable addressing customers’ questions and concerns.

Learn From Your Mistakes — The Importance of Testing

When a new loyalty program launches, brands need to keep a close eye on how it’s running and any areas of concern that need to be addressed. Based on engagement activity, brands can tweak a points system as needed (while keeping return on investment in mind). Brands should also ask members for feedback so that they feel valued and offer them something extra for sticking around during the transition. It's key to keep engagement and earning opportunities fresh and optimized based on performance. This can be done by rolling out new perks and rewards every six weeks to eight weeks, and bringing back popular ones.

As with any loyalty program launch, adjustment or revamp, there's going to be that difficult transition period for both the brand and the customer. While there's no formula for a perfect launch, by sticking with these guidelines you’ll be prepared to roll out changes to your loyalty program and take on and stamp out backlash with haste, precision and transparency.

Lindsay Bloom is senior marketing manager at SessionM, a cloud-based customer engagement platform.