Are loyalty programs a selling point? When loyalty is disconnected from customer experience it becomes just one way to take advantage of a promotion — a big coupon. Is it worth your time and effort? Customers have plenty of coupon and discount options, often pick and choose based on instant gratification.
Case in point: airlines. The idea of putting expiration dates on unused points if someone is not traveling on an a carrier for a while may sound logical. We're loss averse. But air travel is an expensive proposition — expiring points may create the opposite effect if the experience was just passable. When people who used to fly all the time don't use our airline anymore we have the opportunity to ask a better question — why not us?
For example, Air France started switching all its long haul flights to Delta a few years back? As a member of the Flying Blue program that created a conflict. The unintended consequences of the switch in my experience included getting locked out of the Delta online account, then, adding insult to injury, Delta requiring us to pay to keep miles/points active.
We all have airline stories where things were so bad that we ended up paying more, willingly, to have a better experience. Direct flights where the staff is not boarding the rest of the world ahead of us, thus leaving no overhead space for a small carry on.
We are not alone
In a recent survey, only 17 percent of respondents choose where to shop based on their participation in loyalty card programs and 93 percent of consumers would continue to shop somewhere, even if the retailer scrapped its loyalty scheme. (YouGuv SixthScence) [source: Business Insider]
What does this mean for business?
To stay with the subject of airlines. Carriers like USAir and Delta offer loyalty card programs. Good luck in connecting with USAir to use the points, by the way. 800-numbers where nobody picks up, a Twitter account that will respond only to celebrities, and a Web site that needs a legal translator.
Unhelpful on all fronts. They are not alone.
Are points truly a way to encourage loyalty?
Whenever I can, I fly Southwest. At least I know what I'm getting right there and then. And I can pay to board earlier and avoid being crowded out of overhead space. Traveling light is a big advantage. I pare down constantly and am amazed at how easy it is to move around.
Compare United, Delta, and other few domestic airlines, and you find that carriers Southwest and Virgin are eating their lunch. According to a Zagat Survey published last year by USAToday it's the consistent and uniquely targeted experience that does it.
Meeting needs. And seeking long-term loyalty and affinity.
What can you do with the points? In an informal survey among colleagues, peers, and friends, I found that most of us carry AMEX Gold cards. Why? Because you can do many things with their points.
You can link them to Amazon for free books, choose from a diverse list of places to dine out, and even get some free flights or upgrades (alas, with fewer airlines these days).
When it comes to any kind of marketing program, execution also matters. Integrated marketing communications pro Beth Harte, co-founder and facilitator of #IMCchat on Twitter (tune in Wednesday evenings) asks:
- Companies use loyalty programs to determine and track loyal customers and their spending habits (i.e. AMEX, OfficeMax, Wegmans, etc.), is it possible to gather this data without a “customer ID card”?
- How does aggregating customer behavior (vs. market segmentation) help marketers to have better conversations?
- When it comes to loyal customers how often should conversations take place before burnout occurs (for both parties)?
- Does conversation need to be a brand trigger?
#IMCChat co-moderator Anna Barcelos says:
Companies need to realize if there is no emotional bond between them and customers, these programs fall by the wayside, eventually.
I'm loyal to many brands that I have emotional connections with whether they interact with me or not (who don't even have loyalty programs). They simply fulfill my basic needs and make my life better. There's the magic!
Only it's no magic, it's simple. Maslow 101. Customers are catching on that these programs are bogus.
Companies are confusing loyalty with convenience, which goes in and out, because companies aren't consistent. The customer is a very tricky thing, and companies have to work hard to provide consistent value, not automate weekly mailings of coupons or hand out plastic cards. (Hey, some folks are OK with this I guess).
I carry around key fobs to CVS and Rite Aid (accumulating points I'll probably never use), have hundreds of thousands of American Airlines frequent flyer miles that I can only redeem under unrealistic circumstances…
and have recently left my cable company after 20 years without them even caring, which tells me they never knew my customer lifetime value to begin with, and now I'm with a new cable company for no other reason than them being cheaper and my having gotten bored of my previous company.
It depends on whether the company truly cares, or if it is a revolving door for indifference.
Having loyalty programs managed this way can only lead to disappointment. You're training buyers to be disloyal, to use what they can and dump you when a better offer comes along. And the programs are not useful to your business, if you don't start looking at all this POS and other data you are collecting and use it to get to know and help your customers.
Stop automating. Start getting personal. Here's the data to back it up.
I agree with Anna Barcelos, social media has really made all the deeply troubling issues float to the surface. It's no longer the Emperor's New Clothes… customers are telling him he's naked. That's what social media is doing.
Customer loyalty comes from conversation, not gimmicks.