What: Many loyalty programs underperform due to economic misalignment, poor customer understanding, and lack of differentiation.

Why it is important: The article provides insights into evolving consumer preferences and the need for personalization in loyalty programs.

High-performing customer loyalty programs can significantly impact buying decisions and company valuations. However, many programs underperform due to poor economics, lack of customer understanding, and low engagement. Successful program redesign involves several key steps:

1. Accurate customer profiling using high-quality, actionable data.
2. Understanding what customers truly value, often through personalization and convenience.
3. Creating compelling hooks to attract and retain members.
4. Incorporating gamification elements, especially for younger audiences.
5. Building community around shared interests.
6. Considering strategic partnerships to broaden program appeal.Effective programs often require significant upfront investment but can scale quickly. They should focus on stimulating desired behaviors cost-effectively and use technologies like AI for personalization. Successful programs can transition from marketing tools to revenue drivers, integrating with commercial operations.Companies are advised to start with basics, identify valuable customers, understand their preferences, and use testing and learning approaches. This strategy increases the likelihood of generating strong ROI and turning consumers into brand promoters.

Why Loyalty Programs Fail