Loyalty Truth

I’m an observer of loyalty and rewards programs, it’s in my blood. So, when I hear people say they can’t think of more than one or two loyalty programs that stand out for them, that influences where they shop, my curiosity is energized.

As business people, we invest in loyalty programs and expect them to return an assortment of benefits with value to the enterprise. These benefits can be tangible and immediate when loyalty members deliver incremental visits and sales, or a bit more esoteric when the business builds customer knowledge through creation of a marketing database populated with information and activity from loyalty program members. There can be strategic benefits as well, when a loyalty program responds to competitive efforts or plays a role in new products or brands within the business.

With the obvious upside to a well planned and executed loyalty program, why do so many brands treat their customer programs like a necessary evil? All too often we have witnessed brands allocating just enough budget to get a program off the ground, only to starve its future prospects by limiting investment in the value proposition, customer communications, front-line staff training, and data analytics. We’ve also seen the impact of oversimplifying the planning effort, resulting in programs that technically qualify as a rewards program, but have little chance to influence customer behavior in a meaningful way.

There’s no better way to find opportunities for improvement in customer loyalty, than by interacting with as many programs as possible and cataloguing success and failure in the customer experience. Here’s what I’ve encountered over the past few weeks:

• When shopping at Office Depot, I am accustomed to providing my phone number in order to get credit for my purchase in Office Depot Rewards. Recently, with a lot on my mind, I completed a purchase without thinking about the reward program. I then asked the cashier if she needed my phone number to associate to the rewards program. She gave me a sour look and said that we’d have to do the transaction over from the start. Not asking for my phone number was her oversight but rectifying the error was now my problem. Incomplete training was excusable but a poor attitude towards solving a problem impacted my experience.

• The shiny new Cumberland Farms store near my office led its marketing efforts with its Smart Pay program. By downloading a mobile app and associating my checking information to my account, I could pay at the pump with the app and earn $.10/gallon savings. I could also use the app to shop inside the store while enjoying some coupons pushed to me based on my purchases. After my first fill-up, I received a digital coupon for a free Coca-Cola product. I walked inside the store, grabbed the beverage from the cooler and showed my app to the cashier to have the bar code scanned. The next thing I heard was “it didn’t work”. Then there was silence, maybe a shoulder shrug. Two things happened here, incomplete training to enable the cashier to solve a problem and questionable “granularization” of the offer. The SKU offered was so specific that we had to search the cooler for the exact Coke product that qualified for the offer. Next time I might stick to paying at the pump.

• ABC Wine & Spirits has opened some new stores in our area and offers a clean environment and attractive prices for a range of beverages. They also offer ABC Reward Dollars. A cashier asked me if I was a member and when I responded “no”, they just said “take the card and you can save money”. Looking at the receipt, there was a message informing that I could earn a $2.00 rebate after accumulating 300 points. That is equivalent to a rebate of about 66 basis points. How many people do you know that are motivated by basis points? Only if you have a sister-law who works on wall street would that grab anyone’s attention. In this case, there is lots of room for improvement for the customer value proposition as well as the in-store marketing of the program.

Loyalty programs may be everywhere these days, but they certainly are not all built to last. A great idea for the new year would be secretly shop your own program in several locations as well as different channels. What you find may surprise you, and lead to significant improvements to help your business grow.

Photo Credit: Josué Menjivar (license)