Are loyalty programs getting it all wrong?

I was reading through our latest loyalty research study ‘for love or money 2015’ the other day (yes, I keep on finding new insight nuggets each time I read it) and I landed at the section which asked members…

“What is the most important reason that a brand offers a loyalty program?

The top 4 were enlightening, but not too surprising

  1. To keep you from buying from them rather than the competitors (competitive advantage)
  2. To encourage you to spend more with them (Increase value)
  3. To encourage you to buy more often (Increase velocity)
  4. To collect your data so they can improve their own business (data = insights=action)

Sadly and very surprisingly the lowest ranked reason was….

To encourage you to recommend them (the brand) to other people. (Increase advocacy)

Oh dear, so what does that mean?

By my definition, loyalty programs are getting it all wrong (well at least a big part of it wrong).

Let’s just remind ourselves on what loyalty is.

I believe the two dimensions of loyalty are behaviour and belief:

Behaviour = buying behaviour = spend more, spend more often (value and velocity)

Belief = emotional connection = recommend, refer, rave, review (+)

The goal is therefore the movement of Behaviour and Belief in the positive direction by whatever loyalty metrics your program sets.

It is mandatory that programs aim to motivate movement in buying behaviours … spend more, spend more often and spend at me!

But sadly…as far as members are concerned, programs are just not doing enough to get members to recommend the brand to other people.

We (the loyalty program community) need to fix this.

It is a given that building belief is not a one-off tactic, but an ongoing connection with customers through all parts of their experience with the brand.

However, if loyalty programs are there to drive “loyalty”, then more needs to be done in driving belief!

At a simple level start with a little surprise and delight, a random act of kindness, a spirit of generosity or failing that just do something they would not expect!

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