Post redemption churn a neglected loyalty territory

Businesses are using a variety of rewards to encourage their loyal customers to redeem more points. However, focusing too much on rewards risks ignoring the redemption experience, which is as crucial as, if not more important than, the actual rewards.

Loyalty programs are comprehensive approaches to customer engagement, meaning failing to create a smooth loyalty reward redemption experience increases the likelihood of post redemption churn - an element often neglected in customer churn analysis.

We often hear loyalty programs increase customer lifetime value (CLV) — which they rightfully do. Research on the customer lifetime value shows loyal customers with an emotional bond to the brand have 306% higher CLV. But an undesirable redemption experience leads less to engagement than customer churn, wasting all the money and time spent to nurture loyal customers. This means the loyalty program ironically becomes a reason that loyal customers end their interactions with the brand.

What are the major reasons that customers who redeem a reward actually leave a brand and what can be done to minimize post redemption churn rate?

If your customer’s first reaction after redeeming their points is, “Oh God, I will never do this process again,” you have probably killed their excitement with a super complicated redemption process that causes headache rather than joy.

From a tech standpoint, your loyalty scheme may involve a lot of complexities due to its several tiers, reward bundles, inventory configurations, or maybe because you’re a multi-brand company and run a group loyalty program. No matter how complex your backend is, your program frontend should be transparent and easy to understand. Remember not all your customers are tech savvy.

Equally important is the UX of your loyalty program. Your scheme should be totally user-centric, meaning every feature of your program creates a simple point of interaction for your loyal customers.

A digital wallet is an effective way to remove complexity from the redemption process and reduce customer churn. By using some flexible ledgers you enable your customers to have full visibility over their rewards, redeeming them smoothly and conveniently.

Your loyalty program should be aligned with your omnichannel strategy, operating across your online and physical channels. An omnichannel loyalty scheme allows members to redeem their points without any friction, significantly reducing the post redemption churn rate.

As successful businesses are using omnichannel capabilities to meet their customers wherever they are, an omnichannel loyalty program is a great tool to increase touch points where you can meet and create value for your most valued customers.

Omnichannel isn’t only about technology. Adding an omnichannel loyalty technology to your stack helps your retail and ecommerce departments to team up more efficiently, coming up with loyalty solutions that support your business core competencies and nudge users toward redeeming more points.

One of the major reasons for a high post redemption churn rate is a slow response to the actions of the members. 

Real time responses and keeping the delivery promises have a positive effect on customers’ perception of a brand as reliable and transparent. This was one of the key reasons the mobility company SHARE NOW partnered with Talon.One to build up their loyalty program.

An unpleasant experience when receiving a reward propels loyal customers out of their engagement with the brand. The experience of opening a dented package with tapes around to prevent the box from falling apart is not delightful at all — showing the business has no respect or care for their valued customers.

Make sure your digital or physical rewards have a positive emotional impact on your customers, encouraging them to look forward to their next redemption. See every redemption as an opportunity to build a strong rapport with your customers, making them excited about their next interaction with you.

To ensure you minimize post redemption churn, set a follow-up plan. Ask your customers to share with you their feedback on how much they liked the process, what worked well, and what needs to be improved. 

Post redemption churn is a phenomenon that happens when customers leave a brand after redeeming a loyalty reward. A high post redemption churn rate is an alarming sign for a business, showing its loyalty scheme is not effective in keeping members engaged. To fight this type of customer churn: