The Missing Loyalty in Loyalty Programs

(Originally published March 31, 2014, in Capital, here.)

If you buy anything in Romania, then you already have – or at least have been offered – dozens and dozens of retail loyalty cards. You know, that piece of paper or plastic that supposedly means you’re a valued customer. And if you’re like most people I know, you’ve left most of them back home buried in some drawer.

Because customers are smart and they know loyalty when they see it – and they know when they don’t. I mean just because we click “friend” on Facebook doesn’t mean we actually like that person. And just because stores have a loyalty product doesn’t mean they are offering or deserve our loyalty.

The problem is that there is a large and fatal misunderstanding about these programs here. Loyalty schemes are not simply products to be created and offered. Loyalty is not the same as some software program and customer database that is poorly understood and inadequately used. Yet that’s what we see here.

On the contrary, to be successful, loyalty programs must be true programs. They must be well-designed, well-managed and backed by a genuine commitment from the company. They need to be fully integrated from product offers to all customer experiences – whether in stores or on websites.

Yet here what you have – despite the many dozens of schemes – are loyalty products, not programs. They’re more like plastic cakes. They might look delicious in the window but what use are they really?

To be sure, there are many. In the course of a week, you might end up with a card to be scanned, a card to be stamped, stickers to collect, coupons to keep, new forms to fill out. Banks have their own version – or they think they do.

In fact, there are so many of these, there seems to be a backlash. Many customers suspect they are empty gimmicks designed only to get personal information without offering much in return. Then again, from what I’ve seen, the so-called experts here make pitifully little use of any customer information they have.

In other cases, the schemes merely appear as a way of overcharging everyone else. In other words, if you get a 10-percent discount whenever you show your free card, is it wrong to assume everything in the store is priced 11 percent too high? That’s not a loyalty program. That’s a discounting program – and not a very clever one.

The fixes are not simple and they can be expensive. But the expense of a competent loyalty program is worth it in the end, because loyal customers will always spend more and come back more often. Yet without serious programs developed, presented and managed with fairness and trust, you will never have customers that bring you true loyalty.