The Loyalty Program Mistake That Hurts Your Business
Summary
Loyalty programs should change customer behavior, not just hand out rewards. If you’re only rewarding existing customers, you’re giving up margin for no reason.
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Transcript
If you think about it as a rewards program, if it turns into a rewards program for your existing loyal customers, all you're doing is giving up margin to people that would have, that were already loyal and buying anyway. That's where loyalty programs become most dangerous. When you don't think about how you can use it to influence behavior and change behavior, you end up just subsidizing existing loyal customers with margin. And that is a disaster for a business. Because these are the folks that are more likely to buy at full price anyway, and you're just handing them a discount they weren't even asking for. That's crushing to margins.