Loyalty Truth

Yesterday was April 1. To my surprise, I received these fantastic offers from three of my favorite loyalty programs.

American Airlines AAdvantage sent me an email offering discounts on fares between some of my favorite and most traveled cities. They even distinguished between those cities which I frequent for business and those for personal or vacation travel. Talk about relevancy, a great deal, and a call to action that I could not resist!

Best Buy Reward Zone sent me a snail-mail offer for a Blue Shirt guided shopping experience to help me select the right HD digital camera just like I told them I was in-market for through a recent survey. They piqued my interest and launched me into action to finally make that purchase to create the video content I plan to post on Loyalty Truth.

CVS delivered on my purchase data they have been collecting through CVS ExtraCare for the past 2 years. Instead of offering me discounts on products that I have not bought and in categories which I don’t shop (cosmetics), they gave me a break on that contact lens solution that regularly costs an arm and a leg. I’ll bet they had Bausch & Lomb reallocate some co-op money based on their recognition of my spend in that category. Whatever the reason, I was delighted to receive the discounts right on my purchase receipt.

Alas, yesterday was also April Fool’s day and none of these offers really took place.

With Good Friday in mind, today would be a good day to think good thoughts and imagine a few ways in which loyalty sponsors could charge up their programs and create the win-win of increased sales and customer engagement.

The best starting point would be using their data to deliver the types of personalized offers I fantasized about on April Fool’s day.

Next would be pledging to never provide incentive for any consumer behavior that is not in the best interest of the customer. Rewarding on debit card use with the quiet aspiration to generate increased overdraft fees would be top on the list. Fortunately this temptation will largely be taken off the table as banks are required to invite debit cardholders to opt-in or out for overdraft protection. Bank of America is ahead of the curve and has already announced that it will curtail overdraft fees on debit as of June 19.

Third would be to understand that higher redemption rates mean higher customer engagement, program satisfaction, and translates to higher customer lifetime values. Seeking higher breakage rates is antithesis to a win-win with customers. The fear of increased costs driven by higher redemption rates can be moderated through disciplined financial measurement of a loyalty program and balancing rewards with little or no financial leverage (cash back) with those that have it (experiences).

All of these Good Friday dreams are well within the power of loyalty sponsors to put into motion. The data is there, the ability to communicate exists, and customers have spoken that they are just waiting for their favorite brand to engage in a relationship with more value and relevancy.

Spring hopes eternal!