Loyalty programs are supposed to be your secret weapon—your way of keeping customers coming back for more. But what happens when that carefully crafted program starts doing the opposite? Instead of inspiring loyalty, poorly designed programs can frustrate your customers, push them toward competitors, and even damage your brand. Here’s why your loyalty strategy might be driving customers away—and what it reveals about the evolving expectations of modern shoppers.
From tiered memberships to cryptic point conversions, many loyalty programs resemble math puzzles more than incentives. A customer shouldn’t need to decipher a manual to understand how to redeem their rewards.
Starbucks revamped its loyalty program in 2023, introducing changes that made rewards harder to earn. The backlash was swift, with customers taking to social media to express frustration—and some pledging to take their coffee habit elsewhere.
When customers realize they’ve spent hundreds of dollars only to earn a $5 discount, the illusion of value quickly evaporates. Loyalty programs that deliver minimal rewards relative to spending make customers feel unappreciated.
Amazon Prime, while technically a subscription rather than a traditional loyalty program, thrives because members feel they get consistent value, from fast shipping to exclusive entertainment.
Too many brands take a one-size-fits-all approach to loyalty, mimicking generic point-based systems without tailoring them to their audience. If your program looks and feels identical to your competitors’ programs, what incentive do customers have to choose you?
Apple’s lack of a loyalty program hasn’t hurt its success because its ecosystem inherently rewards brand loyalty. Customers stay because of the seamless integration between products, not because of discounts or points.
Loyalty programs that rely heavily on discounts and promotions often attract deal-hunters rather than loyal customers. These shoppers are motivated by price, not brand affinity, and they’ll leave the moment a competitor offers a better deal.
Nordstrom’s “Nordy Club” succeeds because it blends tangible perks, such as free alterations, with emotional rewards, such as exclusive events and early access to products.
Modern loyalty programs generate a treasure trove of data, but failing to leverage it is a missed opportunity. Customers expect personalization, and a loyalty program that doesn’t reflect their preferences feels out of touch.
For example, Sephora uses data to create hyper-personalized experiences, tailoring promotions and rewards to individual preferences through its Beauty Insider program.
Loyalty programs often focus on attracting new customers with sign-up bonuses while neglecting long-term engagement. This front-loaded approach creates churn rather than loyalty.
Keeping these considerations in mind when designing your loyalty program will help boost customers’ emotional connections with your ecommerce brand and help you stand out from the crowd.