Today, brands leverage loyalty programs to acquire and retain customers, particularly those they lost during the height of the pandemic. But loyalty programs are a symbiotic relationship: Consumers look to programs for better experiences and cost savings, especially in light of the current economic crisis. As both customer and business needs change, programs are evolving accordingly. Forrester’s Q1 B2C Marketing CMO Pulse Survey, 2022, shows that 35% of brands that have loyalty initiatives have recently revamped them, and 29% plan to modify them within the next year.
Changing a loyalty program is delicate business — and consumers take time to adapt to any change that they believe impacts them negatively. Dunkin’ recently restructured DD Perks to Dunkin’ Rewards — a program meant to, as it claims, “keep America running with the best that Dunkin’ has to offer.” The new program offers customers new ways to use their points, most significantly on food rather than just drinks. But customers, quick to share their frustration on social media, are having a tough time accepting a program that now requires them to use more points to redeem their rewards. Brands should expect some consumer frustration with program changes, and our research shows that this will likely subside as they become familiar with the new program. Anticipation of change may make consumers wary, but ensuring a high-quality experience will help you regain their trust.
Backlash is likely inevitable, but brands can manage the chaos effectively. When you are considering changing your loyalty program structure:
- Talk to your customers. Conduct customer research first to understand what they like and don’t like about the program. This will ensure that you are redesigning the program to meet both your brand’s needs and those of your customers. Dunkin’ states that it asked its DD Perks members what they wanted to see in a new program and heard “flexibility, variety, and recognition.”
- Be transparent. Carefully consider how you message your program changes. Communicate openly with your members before, during, and after changes take place to ensure that they feel well informed. Dunkin’ could have been more transparent in its marketing of the new program by acknowledging that the number of points required to redeem drinks has risen and countering that with the facts that members earn points faster and rewards have been expanded beyond just drinks to include food.
- Focus on your most loyal customers. Identify your “devotees” and include them in your consumer research — make sure their voices are heard. Dunkin’s new program gives a 20% points boost to customers who visit 12 or more times a month. If you cut back on rewards, or increase the “price” of them, find promotional ways to make these members feel that they are still valued. For example, brands might offer devoted customers a one-time discount of their next purchase or a complementary gift next time they visit a store.
- Prepare internally. Plan your approach to anticipated consumer responses based on the degree of program change. Educate your customer-facing employees and prepare them with scripts and tools to field customer questions and complaints. For example, crew members can remind Dunkin’ customers that they can now redeem multiple items in a single transaction.
- Stay adaptable. Remain flexible, and be prepared to help your members adapt to loyalty changes. In an interview for Yahoo Finance, Dunkin’ President Scott Murphy stated that it is considering adding back a free drink on the member’s birthday. And prove to your customers that you care by being open and available to them. This could include honoring point balances beyond the expiration date, responding to every single customer question across channels, or helping customers understand how to use the new mobile app.
As loyalty programs continue to change, we will have more to say about the shifting landscape, so be on the lookout for upcoming research. For questions, schedule a guidance session with us! We look forward to hearing from you.
Note: Ben Nagle, research associate, and Cole Walsh, researcher, assisted with drafting this post.