Enrollment levels in customer loyalty programs may have reached an all-time high, but that doesn't mean all loyalty programs are created equal or that all customers are equally loyal. According a study recently released by Bond Brand Loyalty, as many as one-third of all loyalty program participants wouldn't remain loyal to the brand if it weren't for the program.
Some executives might not care beyond the surface sales data, but expect that sentiment to change in the near future. Customers are becoming more selective about loyalty programs despite having increased their enrollment from 10 in 2014 to 13 in 2015. Mostly, they want to avoid spam-centric programs that push out content and opt in to those that truly listen and understand their customers.
Shelly DeMotte Kramer, CEO of V3 Integrated Marketing, was right to note that there is often a perception gap between customers and the companies that are trying to win them over, citing a recent report by DotMailer. Whereas most customers said they join loyalty programs to receive discounts as an incentive to make a purchase or when they are ready to make a purchase, most businesses said their program participants want to learn about new products and receive product information.
Wait, what? Customers want to buy stuff but companies want to talk?
Of course, this one finding doesn't mean customers are in it for the discount alone. As marketer Danny Brown so eloquently wrote last year — it ain't what you do, it's how you do it. All the discounted carrots and rewards in the world won't create customer loyalty unless you're prepared to better serve your customer or make their experience even better. That's what they really want.
Consider the common denominator among three of the better run loyalty programs in the country. Starbucks fans receive drinks, food, and refills when they earn stars. Hertz Gold Plus members receive the fastest pick-up and drop-off experience in the car rental business. Barnes & Noble book fans receive book coupons, in-store discounts, and free shipping for online orders.
All of them focus not only on delivering a discount or reward, but do so by also removing perceived industry barriers. Do you want a second cup of your favorite coffee for free? Do you want to skip the line and head right to your car rental? Do you want to skip the cost of shipping (with no regard to how much is being spent)? It doesn't matter if you do. These companies know their customers do.
Do you know what is important? According to the study mentioned earlier, 70 percent of 10,000 consumers surveyed did not strongly agree that loyalty program experiences are consistent with their brand or company experiences. But nearly 20 percent of them strongly agreed that they could replace their current loyalty program if the competition was willing to offer them something better.
If that's true, then the loyalty program might only be a business Band-Aid with just enough stick to keep unloyal customers around until the next shower. And what's worse? If it is washed off or the card is tossed or the app deleted, it will be considerably tougher to recapture that customer again.
The research-backed takeaway here ought to be obvious enough. If the point of a customer loyalty program is to increase customer-business interactions (purchases and referrals), then it is even more important to make those interactions count — online, offline, with an app, or as part of an extended CX ecosystem. After all, discounts aren't always remembered but experiences are hard to forget.
This post was originally published on Words, Concepts, and Strategies by Rich Becker.