What Price Loyalty?
By John Hennessy
Forbes.com staff writer Tom Van Riper collects some interesting information and opinion on reward and loyalty programs.
A recent Jupiter Research study concludes that, with so many in the industry caught up in the arms race of who can give out more rewards, no one has stopped to notice that most rewards programs aren’t particularly effective at building customer loyalty or returning profits. There was no discernible difference in investment returns between companies that put resources into a formal reward program and those that don’t.
RetailWire Braintrust member Mark Goldstein, president of Loyalty Lab, comments that, “Shoppers are spoiled.” Mark continues, “If I give you my business, what will you give me?”
Another issue with loyalty card programs according to Jupiter analyst Patti Freeman Evans is, “Too much sameness.”
As an example of programs that work, Freeman Evans cites Neiman Marcus’s InCircle program. This program gives favored customers unique goodies, such as invitations to private parties and free wrapping.
Ms. Freeman Evans also cites Harrah’s Entertainment as winning high marks. Harrah’s responded to customer surveys to offer free food and shorter lines for casino guests.
Common between both is a response to customer preferences while being unique to the particular retailer that’s offering them.
Moderator’s Comment: How can retailers breathe new life into existing loyalty programs?
If you pay shoppers to shop with you, it should be no surprise that they’ll shop with someone else who will pay more or leave you when you stop paying.
If you reward with discounts only, it should be no surprise that shoppers leave for bigger discounts.
Why not try for something completely different?
The successful programs cited offer unique value, not more of the same. They also stand out for not just listening but responding to the requests of their
Consider what you can do to let shoppers know they are important to your business. How about reminding shoppers of products they need to replenish? What
about a thoughtful, surprising and relevant reward for your most valued customers?
Acknowledging personal preferences combined with a little creativity will help you stand out among all the sameness. –
John Hennessy – Moderator