The Loyalty Card Conundrum
By Al McClain
So here’s the thing about
loyalty – it’s whatever the individual shopper/consumer wants it
to be, not a marketer’s program. One person is loyal due to personalized
service, another likes the one free after ten purchases deal, while someone
else wants to accumulate points. The problem seems to be that at least
some marketers are more in love with putting together programs and setting
rules than they are in really connecting with their customers.
Citibank and American
Airlines have a program, for example, where one can earn 20,000 AAdvantage miles
for doing the following:
- Open a checking account with
at least $1,000 by 6-30-09;
- Make one direct deposit or
pay two electronic bills or make five qualifying non PIN-based purchase
transactions with their debit card per month for twelve consecutive months;
- Remember to register for the
program using a special code;
- Wait up to 120 days from completing
all the activity to receive the miles.
Meanwhile, speaker after
speaker at last week’s Loyalty Expo advised marketers to “simplify,” “connect
with consumers” and “keep it real.” With the above example,
we can see why that advice is necessary.
that households have an average of 14 loyalty cards yet a Colloquy presenter
said that only 6.2 of those 14 memberships are active. In other words,
consumers have a lot of loyalty cards and can’t keep up with them all.
Yet, here’s the program that started it all in 1981 making consumers jump
through nearly impossible hoops to claim their award.
For the 80 million 12-to-31
year olds classified as Millenials, programs like the above example make even less
sense. Panelists at a session on “Building Engagement with Millenials” said that this group is very connected with
friends and family, relying heavily on word-of-mouth for everything. Millennials want instant gratification – they prefer
instant cash back (who doesn’t) versus mileage rewards that take a long
time to accumulate.
Many would argue that consumers, if left to their own devices, would
really prefer to just have better prices than wade through piles of special
offers and loyalty program rules. (Can anyone say Wal-Mart or Southwest Airlines?)
But, since there can be only one low price leader for any given type of business,
everybody else needs to think about what else will work best and perhaps
try the following tips:
- Keep loyalty programs and special
offers simple enough that harried consumers can figure them out easily
- Don’t try to trick consumers
with onerous rules and regulations – you’ll get trashed via social
- Personalize offers enough so
that shoppers will know you are on the same page with them, but not so
much that they think you are snooping on them or trying to be their “friend”.
- Think about what you offer
from the perspective of consumers who are going through tough times more
often than not, and are continuously bombarded by
“deals” from marketers of all sizes and stripes.
What do you think are the main problems with customer rewards programs?
Where are the biggest opportunities?