Loyalty is a result of the overall actions of the brand, not just an attractive loyalty program.

Brands that excel in customer service and customer-friendly policies engender loyalty even if they don’t have any specific loyalty program.

That said, the transactional loyalty programs certainly can be helped with a retake. Rule-based loyalty tiers and targeting is going to miss a bunch of opportunities. Brands can recognize VIP customers and influencers early and engaging them.

Retail loyalty still revolves around discount in exchange for your information – let’s be clear. I’m a member of United’s 1K loyalty program. I got to the Palm Springs airport last year to find 10 minutes later they canceled my flight to Denver. I went to the agent, she took a few minutes and then said, “Follow me.” We went to the curb where she hailed a cab, handed him a voucher, and told him to drive me to LAX – three hours away and handed me my new flight tickets. What mattered to me, and what has earned my unabashed loyalty, is they realized getting me there was all that mattered. And they fulfilled it without any fuss. Until retailers move away from “all they want is discounts” they’ll fail to inspire the true loyalty that I have for this airline.

Consumers want something valuable in exchange for their loyalty and want confirmation that the brand they are loyal to is worth the commitment. In our current environment and going forward, this is going to be even more critical to consumers as the emotional value may be more important than transactional value.

Customers are loyal to brands for a number of reasons, including service levels, attentive associates, ease of shopping, and brand values – what the company stands for. But actual loyalty programs come into play, too.

I think that if you asked consumers why they choose one loyalty program over another they will give you a “what’s in it for me?” answer. American Express and Southwest Airlines offer both: strong values and easy to understand rewards programs. Ulta has a good one, too. The more complicated the loyalty program the less interested customers will be.

Transactional value is a temporary interest. Special treatment, some exclusivity will return as as the emotional value items. Whether retailers realized it or not, the pandemic offered them a unique opportunity to impress and please their customers with something extra, or practical under the conditions. Taking advantage of that unsolicited opportunity to please and go the extra hundred feet (not mile) will have gained the retailers that executed to the opportunity more loyalty that most loyalty programs.

This is one of the most insightful articles on the issue of “loyalty” that I’ve read in a long time. Thanks Phil.

This is an old song from me but — loyalty in retail doesn’t exist. There is only transactional value. The question posed to us today is worded correctly with the key phrase being: “at the present moment.” It’s always about the present moment. A customer choice in your direction has to be earned over and over in each present moment.

Retailer loyalty programs are just another thing to juggle for all of us already overburdened consumers. As with airlines, retail customers are likely genuinely loyal to maybe one or two brands. The rest is noise. And with the noise comes the mind game of having to leverage an emotional purchase, like buying a dress or a jacket against a perk or a monetary award. Takes all the fun out shopping. Retailers, know who your customers are and what they like to buy and then slip them a thank you discount coupon or any other means you can dream up to, as they say, delight and surprise your customer. Delight and surprise are emotional responses to your brand. Saddling customers with loyalty program bookkeeping is why loyalty program participation wanes. Post-COVID, human emotion will prevail.

In our 2019 consumer study Maritz Motivation found that Mercenary Loyalty (transactional/reward based) was the primary driver of brand loyalty for 48 percent of the population. While this represented the most prevalent mindset, it was a decrease of 7 percent from the previous year, with True Loyalty (emotional/experience based) climbing +8 percent to 38 percent. So setting the stage in that regard, transactionally focused consumers already held the edge, though they were losing ground. Obviously 2020 and 2019 are very different times. As Bob’s story pointed out earlier, even if a customer is initially drawn to a brand for transactional purposes, the higher they climb in a program structure/the more they engage with a brand, the harder it is for the consumer to ignore the relational side of things (and vice versa for the brand if they are to be successful). Because of the pandemic, the frequency with which customers have been able to engage with their favorite brands has taken a hit in many industries, so transactional offers may be necessary to re-invigorate the… Read more »

Only a small portion of “loyalty” programs actually create any loyalty. There is lots of evidence that basic points for purchase programs are primarily adopted by the most promiscuous value-seeking consumers, who generally participate in every competitors’ program. Customers tell us they have fatigue from too many loyalty programs. Very few retailers leveraged all the customer specific data they collected via loyalty programs to actually make the shopping experience better. And now, in the COVID-19 era, customers want to spend less time at the POS, and certainly don’t want to touch the keypad to type their phone number, or hand a key-fob to a cashier. So I think COVID-19 accelerates the demise of poorly executed loyalty programs. That being said, there is tons of room for retailers to use data to know their customer better, and use that data to win more share of wallet and drive up lifetime customer value. While Prime is a great lock-in for Amazon, one of Amazon’s strongest loyalty pillars is that so much of your purchase history is on… Read more »

Shoppers don’t feel loyalty until we show them loyalty. Frequent shopper programs that depend heavily on accruing points or discounts may be “sticky” in some ways, but they tend to breed cynical customers who are conscious of the manipulation and easily pried away by the next new offer.

Personalization is the key to delivering value in the form of convenience, experience, service — and yes, price too. Transparency is key. When shoppers can perceive how the game is rigged in their favor, they are more open to form a relationship with a brand.

Thanks to everyone for the thoughtful comments. It’s interesting to see the general consensus on the shortcoming of loyalty programs, especially in retail. If you have any interest in reading more there’s a white paper on the topic here: https://www.linkedin.com/feed/update/urn:li:activity:6675817415961542656/