I’ve seen a few “Top 10” lists looking for clever ways to inform the community of loyalty practitioners the reasons why loyalty programs fail. Some of these lists are based on “research” that was so narrowly conducted that the results are more conjecture than fact.

I have been involved with the launch and operation of many loyalty programs and still can’t offer any statistically based opinions on why programs most often fail. Staying true to the mission of Loyalty Truth, I want to offer the most transparent and valuable information possible while staying in compliance with confidentiality agreements and my own ethical compass. My opinions are rooted in having my sleeves rolled up while working with clients shoulder to shoulder and trying to generate profit.

Here is my own experientially based list of reasons why loyalty programs run into trouble:

DIY only works at home! The breadth and depth of information about loyalty program strategy has yielded a result that is counter intuitive. One would think that the more information disseminated, the more program sponsors could successfully plan and execute their own programs. I don’t see it working out that way. When companies elect to not engage the services of loyalty planning specialists, or worse, allow themselves to be convinced that loyalty is “simple”, the results can be disastrous.

Budget for the whole scheme! More than once I have seen corporate budgets account for pilot programs but not roll out. Or, they include all operational elements but miss the need for communications including media and promotion. In 3 cases over the past 18 months, I have encountered organizations that were not making entries to the financial reserve for the value of unredeemed points, even though they were giving lip service to the subject in meetings. Each of these examples can derail a successful pilot if there is no money available to move to the next level.

The Owner is NOT in! Strategic planning efforts can be managed in team format but when the time comes to put the program into market, there must be a designated project owner that is recognized throughout the organization and has a reasonable degree of power and influence. Imagine the loyalty VP not being able to execute a promotional/media plan because the Marketing department wants to revisit the entire communication strategy. Or, trying to use line resources to recruit merchants into partnership when no one told the line personnel why they should care to help? Like any enterprise level initiative, loyalty programs must have clear owners which are empowered to get the job done.

Measure What? I bet you have seen more than one consultant fire up a PowerPoint with a circular process depicting “Plan, Test, Measure, Adjust”. If you have not, you just haven’t met with enough consultants! (Full disclosure: I have one!!) If we agree that data driven marketing programs that take the form of “loyalty” programs are created to amass customer and transaction data in order to understand customer behavior and build long term relationships, then why don’t we ALWAYS commit to a measurement plan that is well understood by stakeholders and is regularly executed and discussed at high levels of the organization? I had a respected colleague who posted a sign on his office “If you can’t measure it, it doesn’t matter”. A loyalty take-off of this sentiment might be “Don’t collect the data unless you’re going to do something with it”.

I am going to stop here if for no other reason than to suggest that valuable learnings can come in forms other than a “Top 10” list. Letterman is funny but he’s not Peter Drucker.

Loyalty programs work when planned correctly and executed carefully. They must have an empowered owner and be measured on a regular basis. Enlist the help of loyalty specialists to help you build your strategy and then make them stay around to have a role (and be somewhat responsible) in its execution.

The good ones will eagerly take you up on this challenge as they know that success is tied more to brilliant execution than a beautiful PowerPoint articulation of the strategy.

Bill Hanifin