Loyalty is a two-way street

Loyalty programs are an important tool for brands looking to drive repeat business and gather information about customers. Loyalty is a two-way street, though. Customers will share personal data as long as the process is simple and the rewards are worth it. Fail on either of those measures, though, and customers may revolt.

Recently, some consumer brands have started asking shoppers to validate purchases by taking and uploading a photo of their receipt. Social media blowback has been overwhelmingly negative, ranging from frustration to outright abandonment of the brand. Such powerful reactions provide useful insights about loyalty program design.

Make it simple. Receipts these days are like water in a California restaurant. You have to ask for them. Also, many people throw the receipt away before they realize they need it to claim their reward. That creates an immediate opportunity for the program to fail.

Make it reliable. Even if you keep your receipts long enough for a photo, the process can be disrupted by bad lighting or faded or damaged receipts. As a result, receipt validation fails 15 to 20 percent of the time. There are workarounds, but how much frustration should a brand expect its customers to accept?

Make it private. Privacy scandals have made consumers wary about sharing personal data, which means brands have to find creative ways to get customer information. Receipt validation is one approach, but most consumers recognize it as an overt attempt to gather information about when and where they shop, and what else is in their bag. That’s a lot to trade for a few loyalty points.

A better option. There is a better way. The use of unique, on-package codes can address many of the issues with receipt validation. The codes are there until the package is discarded, the failure rate for validation is minimal, and the process provides some of the same information as receipt validation without feeling nearly as intrusive.

With the proper procedures, on-package codes can be used for track and trace, a popular method of proving ethical sourcing, fighting counterfeiting, and detecting gray-market activity. Codes also allow brands to mint and distribute brand currency that can be used in advertising and anywhere else a brand interacts with customers.

Brands want loyal shoppers, and they always will. They also want data. When those interests are in balance, everyone wins. When the loyalty starts to feel one-sided, though, you can count on customers to take notice.