Loyalty Truth

We live in a world that tolerates, if not celebrates, grandiose celebration. Just read the last few press releases to hit your inbox and you’ll encounter a slew of exaggerated adjectives and hyperbole. “World’s best”, “Global Leader”, “robust and scalable” are just a few examples.

So when I saw the advertisement from Discover Card touting that “We are proud to have America’s #1 cash rewards program”, I decided to pause. The fine print below the ad supported the claim as follows “More U.S. households have a Discover card than any other cash rewards card”, this based on 2009 TNS Consumer Card Strategies Research.

Discover card’s brand is more closely associated with cash back rewards than any other and by their tenure in the market, I’m not disputing the claim. My question is whether banging the drum hard for cash back as the most popular and “best” form of card rewards program is compatible with a broader portfolio of rewards cards.

One of the early loyalty marketing firms had a slogan “We do one thing and we do it well”. It was printed on coffee cups and conference room doors as a reminder to staff and customers of the firm’s focus on loyalty marketing. It’s important to focus and there are many examples of businesses which fail as they cannot say “no” to a client request, commit themselves to projects outside of their core competency, and do not deliver to meet client expectations.

Being a “Jack of all trades” and master to none is a risk facing most business people in this frenetic information filled world. We are tempted to move in many directions and we have to decide where to focus our talents, resources, and available cash to get the best results for our own companies and our clients.

Discover card has focused on cash back, but looking deeper, you realize that their value proposition today goes well beyond cash back and includes travel, gift cards, merchandise, and charitable donation options.  In reality, when consumers sign up for a Discover card, are they seeking cash back or does the broader set of reward choices sweeten the pot?

I wrote a few months back about Bank of America’s promotional messaging in conjunction with the launch of its Cash Back card product. The bank described it as “Refreshingly simple. Rewards with no hoops to jump through”, reassuring customers that there are “No Hassle, no tricks, I know what I get, not like those other card reward programs”.

That message will ring true with Discover card cash back loyalists and I’m sure it drove acquisition of new cards at a time when consumers are weary of high interest rate cards and seeking to avoid revolving balances. It’s also a message that implicitly denies the value of other travel and rewards cards offered by Bank of America – unless of course BofA holds itself above the fray as all of its cards avoid “hoops, hassles, and tricks”.

My point is this: Cash back serves a specific market of consumers and is a great solution for many people. When issuers tout cash back to the detriment of the balance of their card portfolio, or really have a cash back card that’s lots more than “just cash back”, they send a mixed message to the market.

Cash back should be marketed as a “good” offer, not the “best”. In reality cash back offers are truly rewards, not loyalty programs as they are the ultimate example of earning a deferred discount on spending, nothing more, nothing less.

Maybe it is better to “do one thing and do it well”.