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Ditch Your Loyalty Cards? Not a Chance.

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Ditch Your Loyalty Cards? Not a Chance.
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Whenever someone vehemently attacks a person, brand, institution, or business concept, I’ve got to be suspicious that a self-serving agenda is at work. The post this week by Brian Palmer in Slate blasting loyalty programs is laced with such a high level of skepticism and “loyalty hate” that the more I read, the more difficult it is to accept even the few valid points made in the article.

Conan O’Brian said it best in his farewell show as host of the Tonight Show, “Please do not be cynical, I hate cynicism. For the record, it’s my least favorite quality. it doesn’t lead anywhere.” See the short version of the video here.

Among other things, the subhead to the post is misleading. Seemingly indicating that “Long receipts filled with coupons (is he going after CVS?) and free sandwich giveaways (he must detest the archaic punch card) define the loyalty industry, the author missed the point from the outset.

While I’ve made fun of the CVS receipts as “36 inches of love” and anything but green, I sure do appreciate receiving the regular flow of real cash rebates in increments of $5, $10, or $12 that I can spend on anything I buy in the store. Maybe Mr. Palmer became so incensed at the sight of a long receipt that he threw hard US dollars in the trash bin.  That’s a behavior I would not recommend to anyone.

And the dear old punch card, well it is being replaced by any number of digital loyalty apps like Belly, Perka, Plink, Shopkick and others that go beyond a frequency reward and create experiential rewards that consumers find fun and enjoyable. Mr. Palmer may poke fun at getting a 10% rebate, but they only have existed so long because they get results.

If he were an advisor to American Airlines, Tesco and the other businesses he so freely criticizes, what would he have them do? Maybe he is a fan of mindlessly placing a 20% off sale sign in the store window. Or is he a fan of  Groupon and other deep discounted daily deal programs? Is the creation of an always-on margin eroding discount strategy now to be considered “good business strategy”?

If Mr. Palmer really believes that loyalty cards are a “creepy way to monitor and exploit your habits”, then he should also ditch the three credit cards he says he carries in his wallet. For US consumers, transactional privacy is in jeopardy for reasons well beyond loyalty programs. When choosing where to spend hard earned dollar among brands on par with good products, prices and service levels, savvy consumers will favor those that express desire to learn more about their preferences and are willing to reward repeat customers according to their patronage.

Mr. Palmer is living a loyalty program but just doesn’t realize it. His Editor is tracking his behavior, his posts, and eventually will reward him for consistent and positive behavior. It’s good to be recognized for positive behaviors, and entering into trusted relationships where more transparent dialogue can take place is anything but “creepy”. If Mr. Palmer’s Editor were as aloof and uninterested in relationships as he claims to be, there wouldn’t be much chance of his year-end bonus coming through.

Loyalty cards are not a bad business strategy, but there are lots of programs out there that are poorly designed and lack impact. Quite the contrary, a well executed data-driven marketing program will return positive results for the businesses that sponsor them and improve customer experience and brand satisfaction for the customers who play the game.

A mentor of mine in the loyalty business told me simply that loyalty programs should be “Fast, Fun, Free and Easy”.  What’s not to like about that combination?

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