Why Do Loyalty Programs Fail? Here’s How It Can Be Fixed


Approximately 90% of companies use a loyalty program to retain their existing customers and channel partners but unfortunately, 77% of them fail.

For the success of B2B businesses, winning your channel partners’ loyalty is crucial. This can be achieved with the help of an effective loyalty program. 

However, not every program works for every business and it is imperative to understand that different factors play a significant role in the success of a loyalty program. 

Here, let’s understand some common mistakes businesses make while launching a channel loyalty program and how to fix those mistakes.

Reasons Why Channel Loyalty Programs Fail And Their Fixes

Multiple reasons can lead to the failure of a loyalty program. Most commonly they fail when the brand fails to recognise its channel partners’ values, behaviour and preferences or if they do not find the loyalty program beneficial. 

Unclear Objectives

One of the primary reasons behind channel loyalty program failure is the absence of clear objectives. Without a well-defined purpose, loyalty initiatives can be misaligned with channel partner expectations and perceptions.  

Therefore, the very question you need to answer while creating or revamping a loyalty program is: What do you actually want from this program?

Although the goals that you wish to achieve with your channel loyalty program can differ from year-to-year, the measures to assess KPI should be constant from the beginning.

To understand more about how channel loyalty programs work and what you can except from it, you can contact LoyaltyFox for free consultation. 

The Fix: Businesses must identify specific goals such as increasing retention, boosting sales value, or driving business. By setting clear objectives, companies can tailor their loyalty programs accordingly, ensuring relevance and effectiveness.

Unappealing Rewards

The success of a channel loyalty program hinges on the perceived value it offers to channel partners. If the program fails to provide meaningful incentives, channel partners are unlikely to engage with it. Common mistakes include offering generic rewards and complex redemption processes. 

Offering the same thing to your channel partners can create a sense of detachment from the brand and they may switch to brands which offer better and more exclusive incentives to them. 

The Fix: Companies should focus on creating a compelling value proposition. Personalised rewards, exclusive access to events or promotions, and streamlined redemption experiences can enhance the perceived value and encourage active participation. 

Lack of Communication

Communication plays a pivotal role in the success of channel loyalty programs. Many companies fail to effectively communicate program details, benefits, and updates to their channel partners. This lack of engagement leads to decreased interest and participation. 

The Fix: Businesses should implement omni channel communication strategies, including email marketing, social media, and personalised notifications. Regularly updating channel partners about their earned rewards, upcoming promotions, and special offers fosters a sense of exclusivity and encourages continued engagement. 

Brands can choose to run social media campaigns, create social media groups, quora groups or a community to interact with their audience. This includes getting feedback from them or solving common issues they may face. 

Complex Interface

Complexity is a common pitfall in channel loyalty programs. Nobody likes to go through multiple steps to simply redeem a reward or point. Everyone appreciates simplicity and convenience in their interactions. If a channel loyalty program involves convoluted rules, confusing redemption processes, or limited options for earning and using rewards, it is destined to fail. 

The Fix: Companies should focus on simplifying the program’s structure, making it easy to understand and navigate. Streamlining the earning and redemption processes and providing clear instructions can significantly improve channel partner satisfaction and program adoption rates. On an overall basis, brands should keep a streamlined experience as their top priority and must create an interface that fulfils this criterion. 

Lack of Awareness

Imagine launching a channel loyalty program and your channel partners are not aware of it. Certainly, it is bound to fail if nobody knows about your program. Brands are required to promote their loyalty program to ensure that every stakeholder is well aware of it.

The Fix: While implementing a loyalty program, brands are also required to streamline their marketing activities to promote their loyalty program. Throughout the campaigns, brands should aptly emphasise and explain the pros of the programs to the user. 

Lack of Personalisation

In today’s personalised marketing landscape, everyone expects tailored experiences. Many loyalty programs fail to deliver personalised rewards and offers, resulting in a lack of customer engagement. Channel partners are always attracted to brands that understand them and recommend products that match their choice. Therefore, with proper use of technology, brands need to understand the preferences of their channel partners and then make suggestions. 

The Fix: Companies should leverage data and segmentation to deliver personalised experiences. By analyzing preferences and sales history, businesses can offer targeted rewards and promotions that resonate with individual channel partners, thereby increasing their loyalty and participation. 

Moreover, brands can choose to send personalised messages or emails to the channel partners on their milestones, birthdays and anniversaries or other special occasions to make them realise how important they are to you. 

Unable To Adapt

Loyalty programs that remain stagnant and fail to evolve with the changing needs and market trends are prone to failure. Market trends are changing day by day which also affects channel partners’ preferences. Therefore, a brand’s loyalty program should be flexible enough to meet these changing market trends. 

The Fix: Businesses must embrace innovation and adaptability. Regular evaluation and analysis of program performance, feedback, and market trends are vital. Companies should continuously seek opportunities to enhance their loyalty programs, incorporating new features, technologies, and benefits that align with changing expectations. By staying ahead of the curve, businesses can revive failing loyalty programs and ensure long-term success.

Improper Use Of Data

In this data-driven world, not using the data in the right way is the biggest mistake brands make. If data is not properly used, issues like wrong segmentation, incorrect lifetime value measurement or erroneous personalisation can occur.

The Fix: Companies can choose to leverage artificial intelligence, machine learning and other advanced analytics to turn the given data into insights with accuracy. Moreover, unlike traditional loyalty programs that use third-party data, modern loyalty programs can choose to gather first-party information about their channel partners through forums, groups, communities and forms.


While loyalty programs can be powerful tools for retention and engagement, it is not mandatory that will be a success.  It is important for businesses to recognise reasons behind the failures of a channel loyalty program to put an effective solution in place. Brands need to set clear objective, provide compelling rewards, make the redemption process easier, and frequently communicate and engage channel partners for the success of the program.

Moreover, in case you are unsure if your loyalty program is right for you or not, you can always seek help from our experts at LoyaltyFox. The team will help you design and build an efficient channel loyalty program for your business.

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