Loyalty is fleeting. Customers are fickle.
I recently read an MIT Sloan Management Review article, discussing results from a survey asking consumers what they value in a program and how they engage with them. I’m always a bit cynical about these types of findings based on what could be very flawed questions.
The article shares:
➡️ They found having a successful loyalty program drives significant value and is critical for growth.
➡️ Having a program scoring high on what we call the Loyalty Performance Score (LPS) is strongly correlated with greater shareholder return, especially in the airline, retail, and grocery/drug/mass-merchandise sectors.
LPS measures: how customers feel about loyalty programs and how well programs drive value for the company (e.g., how often customers choose the brand over other options or pay more to earn a higher status).
Loyalty is fleeting. Customers are fickle.
If your customer experience strategy is reliant on loyalty metrics and the premise that customers loyalty can be accrued, prepare to be surprised and disappointed. I’ll use my personal experience to reinforce my point. Perhaps my experiences and behaviors won’t resonate for you, but I know they do for many.
I’ve had gold-star, super platinum status with airlines, hotels, and rental cars. My goal in 2017 was to lose all my status. I didn’t quite lose all of it but made solid progress!
My favorite airline is different now than it was in 2017. I “spent” my accrued points on gift cards and booking flights for others. Another airline popped up with better schedules and routes as well as more consistent on time status.
I price-shop for rental cars nowadays with my primary criteria being onsite airport location if at all possible. For hotels, I price shop based on location, cleanliness, and safety in the area. My minimal loyalty perks don’t sway my decision.
I don’t keep up with retail loyalty programs or punch cards anywhere else unless they are updated automatically.
I don’t go to the grocery store app to click on digital coupons; the extra effort isn’t worth it.
I don’t keep punch cards for nail salons or frozen yogurt places. I already accumulate too much paper in my wallet!
I don’t want another card for my wallet, another thing to keep track up (extra effort).
If a better option pops onto the market, I’ll give it a try. If it is better (cost/benefit ratio), I’ll leave a company regardless of their loyalty program.
I’ve stopped doing business with brands I once really liked after I started experiencing issues and/or inconsistent experiences.
Being the lesser available evil doesn’t make me loyal to your brand. I may continue to do business with a company just for now. If your loyalty program has good perks, I’ll use the perks until I leave. I will leave and unfortunately I may tell others about being trapped with a company I don’t like (think cable companies).
I may have told the company before that my experience hasn’t been what it once was. A personal relationship may buy a company a few extra tries to get it right consistently, but I will still leave if things don’t improve. I may not even say anything when I finally do decide to leave, if it’s clear either you didn’t care or you didn’t have the resources or weren’t empowered to fix the problem.
A credit or refund doesn’t clear the slate and leave me with only positive memories. If the issue is truly an anomaly and the steps to getting a credit were easy, I may think more favorably about your company. If issues crop up with semi-regularity or if getting an issue resolved requires a lot of effort on my part as a customer, don’t count on my continued business - loyalty program or not.
Loyalty Perks = Thank You
I used to get my car serviced at the dealership where I bought it. Very convenient and only a mile from our house. I’d even get a free wash detail every second or third visit. Sometimes I had a great experience and sometimes it was awful. Sometimes communication was proactive and other times like pulling teeth. I now drive 20 minutes away to a different dealership with no car washes or detailing, but I have a quality experience each time I go, regardless of who I work with. They communicate proactively and advise on what services I need or when I should expect to need them down the line.
I could easily come up with a half dozen other products or services I’ve left behind regardless of long-time customer perks and programs.
I see loyalty programs as a thank-you for my business not a down payment on the potential of getting my future business.
Loyalty programs don’t cause me to overlook poor service, inconsistent experiences or a failure to keep up with new market options.
If your loyalty program is driving growth today – that’s great. Just don’t count on it to drive growth tomorrow.
You don’t accrue loyalty.
You have to earn it with every interaction, with every transaction, with every exposure someone has with your brand AND by curtailing market disruptions with ongoing innovation and experience consistency.
