What’s Up With The Loyalty Programs? (part 1)

Prepared by Bonex Loyalty: bonex.io


The cumulative points liability for all U.S. Programs is estimated to be valued at roughly $100 billion. Apparently, the redemption possibilities, offered by loyalty operators today, are not really cost-effective. Given the value of all the unredeemed points, it is safe to assume that programs schemes are merely engaging customers and scarcely impelling redemption behaviour well enough.
Bond’s Loyalty Report 2017: The Battle For Love & Loyalty

Why Are So Many Loyalty Programs Appear to Be Ineffective?

Vast Majority of Program Offerings Lack A Sense of Purpose And a Rationale for Use

Meaning, customers do not recognize an intended use for the points they accumulate. And those, who do not have a clear vision of how they are going to use their rewards, appear to be less satisfied. Nonetheless, many program offerings hardly ever provide customers with a possibility to set a specific redemption goal and, therefore, increase satisfaction from experience.

Loyalty Schemes Are Not Clear And Straightforward Enough to Draw Interest

Facilitating a better understanding of loyalty programs, including their terms and benefits, directly increases customer retention. And yet it is not always easy for customers to grasp the terms and benefits of loyalty schemes out there. Program operators do not put enough thought into the stage preceding redemption eligibility.

Loyalty Program Operators Invest Heavily Yet Senselessly In Reward Schemes

Merchants put in much effort and spend tremendous resources to drive engagement or deliver rewards galore and yet they hardly ever achieve the desired redemption rates. Customers are sinking in today’s abundance of programs and overflow of rewards, while desperately lacking means of comprehensive points management and effortless redemption.

Customers Often Find Loyalty Schemes To Be Awfully Similar And Therefore Uninspired

Since more and more programs are emerging on the market, highly knowledgeable customers look for more customized and valuable rewards throughout a brand’s loyalty program. However, merchants seem to have no consideration or no resources to build innovative solutions and incorporate personalization into the design of their programs.

Oddly Enough, Many Programs Lack Timeliness And Agility To Satisfy Customer

Today, loyalty solutions should be agile to build and enhance the offering that can indeed increase customer satisfaction. However, operators of the current points-based programs do not engage with consumers in a way new technologies allow them to. Therefore, they fail to meet rapidly changing customer expectations.


The majority of consumers consider being rewarded for their loyalty as the norm but not a differentiator. The traditional schemes appear to be no longer sufficient enough to satisfy a demanding customer, whose loyalty has evolved and requires a more personal and relevant approach. They have simply become a ‘tired’ concept that contemporary marketers should strive to enhance.
Deloitte’s Consumer Research 2017: Customer loyalty, A relationship, not just a scheme

What Are The Major Challenges Of Growing Loyalty With Rewards?

Brands Must Develop And Sustain A Sense Of Allegiance From Consumers

And it is not easy to pursue when consumers have different desires and expectations from their experience with a brand. Nowadays, successfully drawing and keeping customers means being able to blend personalization, purpose and valuable rewards as well as meaningful engagement throughout loyalty programs.

Programs Need To Focus On The Role They Play In The Overall Customer Experience

Loyalty should be about more than just collecting points. The best way to achieve great loyalty is to create remarkable benefits for customers. Businesses should simplify loyalty programs by making them painless and frictionless. While rewarding customers for making purchases is essential, it is the overall experience that truly matters.

Schemes Should Provide Customers With The Option Of Personalizing Rewards

Consumers want to be perceived and rewarded as individuals, not as a group of faceless point hunters. These days, they want their tastes to define their rewards. They want to decide what is valuable to them personally. They expect programs to be more relevant and purposeful to feel rightfully rewarded.

Businesses Have To Reward Their Customers For Providing Personal Information

It is no secret, collecting customer data is of great importance for companies that want to create more customized and meaningful experiences. Therefore, ensuring customers, they get tolerably rewarded for sharing personal information as well as coherently communicating what they get in exchange for it is crucial in convincing them to do so willingly.

Merchants Must Adopt New Technologies To Build Agile And Flexible Solutions

Research shows that today’s consumers are more loyal to the overall experience than to brands, products or companies. And reshaping the traditional loyalty rewards management system in a way that can ensure more relevant customer experiences is nearly impossible without technological breakthrough nowadays.

Businesses Need To Develop And Implement More Internal Loyalty Capabilities

Businesses miss what is now considered a strategic asset: control over their loyalty programs. Given these risks and the lower return on investment in using a third party scheme, businesses need to implement loyalty solutions internally to gain more control and flexibility and, ultimately, to be able to offer loyalty rewards beyond points.


What Does It Take to Advance Loyalty Rewards Management?

To this and many other crucial questions, we will give you the answers in our next article that’s coming soon! Keep up with updates.