Customer Loyalty & Rewards
January 23, 2023

Why Loyalty Programmes Fail: 10 Pitfalls to Avoid

Why Do Loyalty Programmes Fail?

In this article, we'll discuss the most common pitfalls that prevent you from reaching your loyalty programme goals.


Businesses with effective customer loyalty programmes see an improvement in revenue. According to a study, revenue improves anywhere between 25-95% when customer retention is increased by just 5%.

Nevertheless, some businesses are unable to get the desired results from their loyalty programme because they fall victim to several crucial mistakes. One such error is not making the customer the centre of all decisions in the loyalty programme.

This can be the difference between merely functional loyalty programmes and truly effective ones. 




    1. Setting unrealistic programme goals
    2. Failure to communicate programmes effectively
    3. Lack of relevant and engaging rewards
    4. Complicated programme structure and layout
    5. Unrealistic targets for customers to redeem rewards
    6. Overemphasising corporate goals
    7. Choosing the wrong type of loyalty programme
    8. Outdated technology to support programmes
    9. Not recognising potential of gamification
    10. Not recognising your most important customers
  • Prioritise the customer for better results 

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10 Crucial Loyalty Programme Mistakes to Avoid at All Costs


1) Setting unrealistic programme goals

Usually, the first mistake of an unsuccessful programme is setting unrealistic goals and key objectives. When setting goals for your loyalty programme, a good method to follow is the SMART principle: Specific, Measurable, Attainable, Relevant and Time-based. There are alternatives in the acronym but we’ll stick with these. 

For a loyalty programme, SMART goals may look something like this: 

Specific - “we will offer valuable rewards to customers engaged in a simple points-based transaction.” 

Measurable - “our goal is to increase customer sign-ups to our loyalty programme by 15-30%.”

Attainable - “recent tests on our pilot programme yielded a 15% (minimum) uptake on sign-ups.” 

Relevant - “this goal will help generate net revenue retention (NRR) in the long term.”

Time-based - “we aim to see results by the end of the second quarter”. 

In terms of your decision-making for rewards, always prioritise value and simplicity to create a tantalising and frictionless customer experience.

Once customers become familiar with your brand, expand your programme so that it incentivises engagement and retention with elements such as gamification and tiered rewards.

There are many examples of loyalty campaigns that fail due to overly ambitious goals. However, you can ground your ambitions with realistic goals, using the SMART criteria and the other parameters we mentioned.


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2) Failure to communicate programmes effectively

Communication is a critical part of loyalty programmes. Usually, most businesses shout from the rooftops whenever there’s great news to share. It’s no different when it comes to announcing an exciting loyalty scheme!

However, the problem lies in not communicating customer loyalty programmes properly. Sometimes, businesses who give too much spiel, bewilder customers with information surpluses. Or the way a new loyalty programme is promoted by marketing might not truly reflect what’s on offer. Some customers will consider communications about loyalty schemes annoying and irrelevant. 

Believe it or not, businesses give less attention in promoting new loyalty programmes altogether! This is often due to oversight because of little omnichannel support. Or big brand partners who restrict any name association with discounts (remember when we said inconsistent marketing?).  

Make sure promotions are on brand and authentically reflect what’s on offer by maintaining liaison between marketing and sales teams. Similarly, promote offers from partnered brands by highlighting the benefit of the reward or discount. For example try, “25% off your next shop” but leave out the name of the supermarket chain. 

These types of techniques put you in a good position to promote your loyalty programme effectively. Another thing, a loyalty programme with an integrated CRM, helps you identify customers who may be more receptive to new rewards.


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3) Lack of relevant and engaging rewards 

There is no doubt that the quality and relevance of rewards in your loyalty programme will determine its success or failure. The best rewards are those that give customers real value, whether you're trying to get them to buy, make referrals or renew subscriptions.

Prioritise the needs of your target audience when selecting rewards for your programme. Businesses often choose rewards based on factors like availability, price, and convenience, but this practice often leaves customers feeling dissatisfied.

It's important for you to provide incentives beyond just your core offerings whenever possible. Giving customers a choice of unique incentives keeps them coming back for more and is essential for them to stay loyal to your brand.

Solutions like Propello provide tailored rewards by maintaining and monitoring substantial data sets in partner ecosystems. Your customers get 24/7 access to a wealth of partner deals and discounts. 




Rewards vary from shopping and vacations to food and drink, driving and even physical activities., M&S, GoApe, and many more of the UK's top retailers are among the many brands whose discounts and special offers we feature.

Offering personalised and hyper-relevant rewards and incentives is among the most effective ways of driving customer loyalty and creating an emotional connection between your brand and customers.


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4) Complicated programme structure and layout

Customers are often reluctant to sign up to complicated loyalty programmes that involve poor UI and UX design, such as clicking through several web pages to redeem rewards of your website or completing multiple forms, and deciphering complex flowcharts to track progress.

Not providing an easy way for customers to check their reward balances is a major cause of friction. Customers sign up with the expectation of receiving benefits, not to be tested.

First, determine which user data is most crucial to capture at signup, then provide customers with calls to action and guidelines for claiming and reviewing their rewards.

Your members should be able to describe your programme to others without resorting to complicated diagrams.

The type of loyalty programme you choose will often determine its complexity. For instance, if you take the point-based approach, make it easy for customers to monitor their points and redeem them for prizes.

With Propello, your clients can access the system with their own login. When they join the platform, they'll have access to any and all discounts, deals, and rewards available at the click of a button. 




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5) Unrealistic targets for customers to redeem rewards

Developing a unique customer loyalty programme is the goal for many brands. While that is commendable, many businesses make the mistake of establishing reward thresholds that are too high.

Customer engagement in your loyalty programme suffers if members feel they are not receiving their money's worth. Your targets should be simple, and you should explain them in detail. 

Customers should not be required to go through difficult steps to receive a reward. Maintaining high levels of customer engagement and fostering brand loyalty requires striking a fair balance between the rewards received for effort put in.


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6) Overemphasising corporate goals

Customers often stop participating in a loyalty programme when they feel there is no benefit. Loyalty programmes that offer customer incentives can only be successful when both parties benefit from participation.

You're missing the point as a business if you can't demonstrate the value you provide to customers. Regardless of the goals in your loyalty strategy, putting too much emphasis on your own goals will eventually drive away your loyalists.

Despite being a member of about 13 loyalty programmes, the average consumer participates in only half of them. Offering low-quality incentives or setting overly restrictive rules for redeeming rewards can drive users away and increase your abandonment rate.


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7) Choosing the wrong type of loyalty programme 

Implementing a loyalty programme that works for your business's demographic is the best way to develop meaningful relationships with your customers and gain their trust.

Luckily, there are several excellent choices for loyalty programmes available today. Studying your target demographic and consulting relevant customer data will help you choose the best programme and rewards for your business.


The best customer loyalty programmes show how much a company values its customers. Every business should have a strategy in place for retaining its most valuable clients.

Study your current clientele and identify their spending patterns, such as their yearly total. What are some of the things that they frequently purchase? Do your offerings live up to their expectations? How can you improve your relationship with them?

If you do this, you'll be able to pick the right programme and learn how to fairly compensate them for the time and effort they put into your scheme.


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8) Outdated technology to support programmes

Deploying functionally rich and scalable white label technology will reduce time-to-market for your customer reward and loyalty programmes. This type of platform can be launched quickly and is designed to cope with increasing volumes of customers and customer rewards and incentives offered by your partners. Older tech systems or in-house loyalty solutions can be labour-intensive to manage.

Secondly, few things are as valuable to a business as customer data. Customer loyalty programmes are valuable in this regard because they supply a wealth of useful information about your customers.

However, that data is useless if no useful conclusions can be drawn from it. For brands to effectively market to their target demographic, they need access to specific customer information. Customers are more likely to become emotionally loyal when you offer personalised communications and services.


Over 80% of consumers reported that they would patronise brands that offer personalised experiences.


They will be more loyal to your brand if you use their information to create relevant and valuable content and offers. While many organisations may have access to this wealth of information, few actually use it.

Rather than focusing on what really matters—using the data to build and maintain relationships—internal resources are often allocated to deal with slow technology or manual processes. To avoid such situations, you need to leverage technology and implement real-time reporting and dashboards. These insights can power top-of-funnel acquisition or win-back campaigns, among other uses.

Using a dashboard, your marketing team can examine marketing and sales data to determine which campaigns and rewards are performing well. You may also find it useful for keeping close tabs on how your team's various marketing channels are progressing.

Without such a system in place, you might find it difficult to gather and act on customer data that highlights their behaviour. With access to programme data, you can constantly test and adjust your reward strategy to maximise value.

In a tiered programme, for instance, data may show that customers are finding it difficult to navigate between tiers. Achieving the target could be too difficult, or the reward might not be sufficient to motivate them to complete it. Having this information shows you the customers’ pain points and how you can improve the programme in general.

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9) Not recognising potential of gamification

Gamifying your loyalty programme is among the best techniques for boosting customer engagement. The mechanisms of gamified loyalty programmes are popular because they remind people of games they already enjoy. 

A study reported brands that engage their customers with gamified elements enjoy a 63% lower rate of customer attrition. After all, getting quality service is great, but winning a prize by participating in and winning a game will always be a more memorable experience.

The use of gamification in loyalty programmes, which take many forms from leaderboards to treasure hunts, provide a new and exciting adventure for programme members and prompt them to engage with your brand in a new way. It can alter their spending habits and foster positive behavioural change.




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10) Not recognising your most important customers

While it's important to treat all customers fairly, rewarding all customers equally won't make your highest-spending customers feel valued. 

There are two approaches to this: as a first rule, be consistent with how you treat everyone. Simply put, repeat or low-spending customers should be treated the same as one-time buyers as part of your overarching customer service strategy. 

Secondly, you should consider providing tiered rewards of increasing value. This entails providing various benefits to customers based on the amount they spend in your store.

To nurture your relationship with your best customers, you should acknowledge them. Recognising and rewarding customers for their actions is crucial. Companies that implement a multi-tiered VIP rewards system recognise the value of their best customers and offer them rewards accordingly.

Always keep in mind that VIP perks don't have to cost more. Giving people advanced notice of sales and exclusive access to new products costs nothing but will be highly valued.


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Prioritise the Customer for the Best Results

It's possible that there is no such thing as a perfect customer loyalty programme, but that shouldn't stop you from doing your best to provide value for your customers. The idea behind loyalty programmes is to keep them around, so you must prioritise their needs. 

Always keep in mind that the primary goal is to increase customer satisfaction. Customers will be loyal to your company if you treat them well.

If you are aware of these typical mistakes and take proactive steps to avoid them, you can create a loyalty programme that will positively impact your business by offering customers a rewarding experience.


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