With all of the changes, mostly negative, taking place in the world of customer loyalty programming - growth in...
By submitting your email address, you agree to receive emails regarding relevant topic offers from TechTarget and its partners. You can withdraw your consent at any time. Contact TechTarget at 275 Grove Street, Newton, MA.
private-label credit cards, finding the right mix of hard and soft benefits, building an extensive (and often expensive) multi-channel communication program, fixing value of loyalty rewards in customers' minds, dealing with difficulty in redeeming rewards, changes in qualification for rewards, ability to reward best customers, and on and on - I'm more inclined than ever to believe that the best loyalty programs are no loyalty programs at all. Not that suppliers aren't, and shouldn't be, focused on creating the highest levels of customer advocacy behavior possible, it's just that loyalty programs may not be the best vehicle for achieving that goal. In fact, because these programs are typically built to drive more frequent purchasing, rather than create a stronger and deeper emotional and relationship bond with the supplier on an individual customer basis, they can even be counterproductive as a strategic device. Loyalty programs ought not be used as a crutch or surrogate for creating stronger connections with customers, and they too often are just that.
Although there are successful loyalty programs, to be sure, the most effective ways of creating the highest customer lifetime value are a) effective, continuously improved customer-related processes, including messaging and experience management, b) leveraging methods for assuring stakeholder engagement, continuity and productivity, especially among customer-touching employees, c) creating a customer-driven culture, building customer centricity into the DNA of the organization, and d) having a customer information system and database that is as detailed, real-time and actionable as possible, down to the specific customer and experience (i.e., divisible) level.
Paradigm case in point is Ritz-Carlton, as high-end as hotel chains get. No loyalty program, but the best customer database, best trained and most customer-focused staff in lodging.
See also: Getting loyalty programs right.
Dig Deeper on Customer loyalty and retention
Related Q&A from Michael Lowenstein
Find out if luxury retail stores should offer loyalty programs for their customers in this tip. Learn how some luxury retail brands build loyal ...continue reading
Get an experts take on raising the hurdle rates of a customer loyalty program and learn more about value-added benefits from Michael Lowenstein.continue reading
Learn a few ways to measure customer loyalty and find out about customer spend or "share of wallet," which expert Michael Lowenstein believes to be ...continue reading
Have a question for an expert?
Please add a title for your question
Get answers from a TechTarget expert on whatever's puzzling you.