Bill Hanifin
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Every day I play on the seesaw.
It seems like I have one call with a person who expresses doubt about the efficacy of traditionally structured loyalty programs, and then turn around and inadvertently encounter a new program to add to my growing list that I have catalogued and reviewed.
Every seesaw has a balance point.
In this case, the criticism is usually based on impressions formed by poorly conceived programs, meaning I can take it with a grain of salt. On the other hand, the programs I am finding these days tend to lack imagination and justify the loyalty skeptics I meet.
Today I went to freeconference.com to organize a call and was greeted with an invitation to join their newly launched “Loyalty Rewards Program” (yes, they really called it that). The program is simple, earn one airline mile for every dollar spent on premium call services. Participating airlines include American, Delta, and United.
I’m always interested in customer earning velocity as a measure of loyalty program success. From a consumer point-of-view, if you can’t gather enough equity in short order to cash-in for a meaningful reward, the program will be perceived a waste of time.
Free Conference has two key premium services, unlimited recording and storage for $9/month and unlimited desktop sharing for $14.95/month. Imagine if a customer engages both services and spends $288/year. That equates to 288 frequent flyer miles. Let’s be generous and say a premium customer spends about $200/month or $2,400 per year. At that rate, it would take 12.5 years to earn a round trip domestic ticket given a “cost” of 30,000 miles.
Even though the program is free to join, the enrollment form requests credit card information right off the bat, increasing the likelihood of customer disconnect at that juncture.
I spoke with a potential client today who told me his company tried a similar approach to loyalty a few years back and that the slow earning rate turned out to be a club that customers would beat him with on a regular basis. After collecting for a period of time and realizing that the point total was not enough for a $5 gift card, many customers rebelled and the “loyalty” program became a negative from an overall marketing perspective.
There is a truism that I have believed in for some time in this business “loyalty programs are easy to launch, but more challenging to make successful”. Just about anyone can arrive at a simple construct for a rewards program and to generalize, the more simple the offer, the worse it might end up for the customer.
The old automotive tagline “pay me now or pay me later” comes to mind. It’s worth an investment in program planning and a commitment to execution to make the programs work. Much too often, “do it yourself” only results in customers who go their own way.
