BrainTrust Query: The Death of Loyalty Rewards As We Know Them?
Through a special arrangement, presented here for discussion is a summary of a current article from the Hanifin Loyalty blog.
I’m sensing a tipping point in how customers relate to loyalty program rewards, and my thinking goes like this: When customers choose which company to do business with, rewards just don’t matter like they used to.
My take is that the classic loyalty reward scheme — earning points toward "hard" rewards for repeatedly doing business with a company — has been trumped by the customer experience. In other words, today’s customer is more likely to opt for a better experience today, than accept a lesser experience that pays dividends down the road.
Let’s start with a personal example. I recently cleaned out my wallet and found reward cards for both Borders and Barnes & Noble. Now, I know I have points in both of these programs, but I haven’t engaged with either brand for years. Why? I’ve given all my business to Amazon, which for me offers a better customer experience.
A recent blog by marketing guru Seth Godin points anecdotally to a similar trend toward "experience over rewards" happening in the airline industry. Mr. Godin believes that the greater the risk involved with getting a reward — one we have to save for and may never use — the less we value it.
He writes: "Frequent flyer miles, for example, began with the promise that if you flew an airline regularly for months (or even years) you’d get a free flight. The airlines oversold the miles and undelivered on the free flights, though, so the reward started to lose its perceived value — too much risk that you wouldn’t get the prize you wanted. Many of the frequent flyers I know have ceased to ‘save up’ and now use their miles for upgrades, moving the benefit closer in time."
In another sign of the sea change, several companies are now offering customers "loyalty rewards" with no points, or long-term loyalty, needed. Take the telecomm space, where both Verizon and Optimum have recently launched reward programs with merchant discounts, special promotions and exclusive content–with no strings attached. Prove you’re a customer and you’re in.
Why is the trend moving toward more automatic and instantaneous recognition of customers? Mr. Godin attributes the change to the internet, stating, "One of the many things the web is changing is our focus on now." I see his point. Now more than ever, today’s consumer wants things at the speed of the Internet, whether it’s information, customer service–or a perk for being a customer.
- The Death of Loyalty Rewards As We Know Them? – Hanifin Loyalty LLC
- Timing rewards – Seth Godin’s Blog
Discussion Questions: Do you also see retail loyalty programs inevitably moving more toward automatic and instantaneous recognition over earned points? Have consumers become less enchanted towards points-based loyalty rewards programs?