You Can’t Buy Loyalty

Customers Rock! blogger Becky Carroll always has great insights on customer experience. She points to a piece from blogger Chris Baggott, and his poston Best Buy’s Rewards Zone loyalty program. Chris’s position is that Best Buy’s “rewards” amount to no more that junk mail. As Chris shares:

I get paper based junk. My reward for spending around $10,000.00 since joining the program…..and the most recent offer following the holiday season?

A Credit Card Offer!!

Man do I feel special.

This is a campaign, nothing more. Marketing 1.0 just like the airlines. Monetize your list, not build better relationships with your “special” customers.

Chris is not alone in his feelings if the comments are any indication. Companies spend lots of money on loyalty programs. Often the approach is credit card based, primarily because the business model is a little more sellable to the CFO, but in the end, credit-based rewards only benefit the credit card company. Plans that offer incentives and perks don’t fare much better as they simply attempt to “buy” your customer’s loyalty.

So what is a winning formula for growing loyal customers? Here’s my simple list (not necessarily easy to do):

  • Understand what your customers want. This requires you to actually talk with them and listen! Engage them in an ongoing conversation.
  • Provide products and services that support the things they are passionate about. People’s passions drive where their disposable income gets spent. If you can tap into that, you become a destination.
  • Help them to get the most out of the products and services you offer, both before and after the sale.
  • Consistenly deliver great experiences that exceed expectations. Start by eliminating sources of dissatisfaction. Then act as an advocate for your customer at every touchpoint.

Advocacy is the key. You can’t buy loyal customers, but you can be their advocate and advocacy is contagious. A customer who is loyal to your brand because they see you as their advocate, will return the favor by advocating for you. That’s how you build loyalty!


5 comments so far

  1. rshevlin on

    Great points, Doug.

    For better or worse, however, the term “advocacy” has been co-opted by the Net Promoter Score groupies, so that it’s nearly becoming synonymous with “the customer referring the company” and not the other way around.

    I’ve been beating the “become an advocate for your customer” drum in the financial services arena for nearly four years now (through research I was publishing when I was with Forrester Research). Some smart firms get it, but many find it hard to operationalize.

    And I couldn’t agree more that emotional loyalty is what creates the strongest bond between a customer and a firm, product, or brand. But it doesn’t mean that a loyalty program can’t help.

    A loyalty program can be instrumental in stimulating customer engagement — getting the customer to interact with the firm in ways that go beyond simple purchase and service transactions. Good examples are hard to find, but loyalty programs that strive to create community across members, keep them apprised of developments in the field, help them make smart decisions about redeeming their points and rewards, etc. all can help to create that emotional connection that leads to loyalty.

  2. Doug Meacham on

    Hi Ron,

    Thanks for the comment. Let me clarify… I didn’t mean to give the impression that loyalty programs don’t add value. They absolutely do, and most effectively when the program provides things that are relevant and of value to the customer.

    Loyalty programs, as they are typically implemented in the retail sector, are really nothing more than frequent purchaser programs. They don’t, by themselves, make customers loyal to your brand.

  3. Becky Carroll on

    Thanks, Doug, for the compliment!

    I agree, most loyalty programs out there today are nothing more than frequent buyer programs. It is good to reward frequent buyers, but as you mention, if it isn’t relevant, it isn’t valuable. Great marketing should be a value exchange – I buy something from you, it has value for me, I buy more from you or refer others to you.

    I love your idea of acting as an advocate for your customer at every touch point. When we map out how we will treat customers at every touch, we can create a consistent experience that not only reinforces our brand, it reinforces the importance of our customers to us.

  4. […] ensure that the experience consistently exceeds expectations.  These are two elements for my prescription for building loyalty and Disney delivers these at every turn.  Companies like JetBlue should take […]

  5. NextUp on

    […] Consistent retail execution is difficult, especially across 1100 locations (including franchises), but it’s really important.  I don’t know if the failure to execute consistently in my local Panera is representative of the overall chain, but that really doesn’t matter to me as a customer.  What is clear to me is that Panera is not managing this little problem at my store and as I recently wrote, ensuring that the little things are done right (like having the soups listed on your website) is critical to driving loyalty. […]

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