Marketers often confuse loyalty with getting consumers to carry one more plastic card in a wallet already filled with plastic loyalty cards.
I experienced this cartoon a few weeks ago at an Office Depot in Colorado. The one and only cashier leisurely chatted up every customer with the same up-sell pitch (loyalty points, extended warranties, impulse items at the till), even as a line of customers grumbled about how long it was taking and thinking it would have been easier to shop online.
When everyone offers a similar “loyalty” program, has loyalty lost its meaning? Particularly when loyalty seems primarily about price discounts, not creating value that might actually inspire loyalty in a brand.
Time featured a recent piece on a growing backlash against loyalty programs in supermarkets — a “Disloyalty Movement“. Even as loyalty programs are increasing (22 per household versus 18 three years ago), consumers actively use less than half of the programs in their wallet.
Consumers are showing loyalty fatigue. This is driven by loyalty programs without a compelling reason for being combined with skepticism around privacy policies. The major underlying factor is lack of differentiation.
In response, grocery retailer Albertsons has started to dismantle their loyalty programs. Shaw’s, which is owned by Albertsons, has started to promote “Card Free Savings” to keep it simple. As they put it:
“The card isn’t so special anymore. Everyone has one. So we want to take the special step of not requiring one.”
When building loyalty, it’s important not to lose site of the real goal –creating an experience that consumers really value, and will go out of their way to experience again.
(Marketoonist Monday: I’m giving away a signed print of this week’s cartoon. Just share an insightful comment to this week’s post by 5:00 PST on Monday. Thanks!)
Here’s another cartoon I drew about loyalty fatigue last year.
19 CommentsJoin the Discussion
Love this Marketoon! It’s so perfect as I’ve been working to establish with my clients that customer loyalty is not about a program, but about developing unique experiences that build upon the elements that customers already like about your brand. Once again, you’ve nailed the current day experience that I’m hoping brands will realize that there’s much more to the customer experience than being just another number/member. Love your work!!
Hugh Griffiths says
My favourite ‘loyalty programme’ is when I go to a local or specialist store and I am greeted warmly and personally by the staff. There is no amount of plastic cards, mailing list junk, scripted conversations or close to worthless coupons that come anywhere near the positive experience of shopping where you feel like you are known and welcomed. Sure this is a little more difficult to achieve … but scripted, automated and largely lifeless interactions belong online and not instore.
Ted Wright says
How does the AM radio comment apply to service based firms like Jay Baer’s or mine (www.fizzcorp.com)?
What are all those people doing standing in that on-line shopper’s living room?
Loving your work! It’s required reading for every one in our office.
From my experience working with companies on the HR side of things, we often reward the wrong behaviors because they are easier to measure (ie. number of new sign-ups to the program vs providing exceptional customer service). This explains why a cashier will let a long line of impatient customers wait if they think they can get you to sign-up to the program.
Loyalty programs to make consumers more loyal or employee incentive programs aimed at getting employees to be service-oriented, cannot replace a courageous and strong Management team who is able to manage their employees in way that will foster the kind of attitude that will provide exceptional customer service which in turn sows and nurtures the seeds of loyalty.
Bill Carlson says
“Loyal” implies a lot of things which might be all nice, but what retailers really care about are “repeat shoppers.”
My grocery shopping behavior might look like loyalty when in fact it’s really just repeat shopping based on convenient location of the store. If the brand of store changed from A to comparable-competitor B, I’m suddenly going to look loyal to B though in reality, I’m loyal to a location regardless of who occupies it.
Jewel Stores (part of Albertsons) announced dropping their loyalty cards, a move which my wife applauded as she was weary of the question about being a member and needing to produce a card or give a phone number, and as the cartoon suggests, being held up as people searched for cards or got a pitch about becoming a member.
In her mind, little value in a loyalty program where everyone who shops there regularly becomes one (which is different than the intention of having a program which draws or retains consumers). She would say “I prefer shopping here, just give me the best prices you can!”
All that said, I’m not sure I think in terms of loyalty when it comes to stores I shop. Contrary to Hugh, I have no interest at all in being greeted personally. In fact, I had Dominick’s remove my name from my loyalty program record (and receipt printout) so that the checkout people stopped saying “thank you Mr. Carlson” which was clearly not based on any personal relationship.
And I also don’t think it needs to be “unique experiences” — just predictable, repeatable, high-quality engagements. McDonald’s has this figured out — their “bible” for store operations (at least in theory) establishes what’s expected and wherever we go, we can count on an essentially identical experience.
Shouldn’t be looking for ways to reward “repeat shoppers” who should want to be that for good reasons… And discounts aren’t enough to keep people shopping at a bad store.
Steve Willson says
It’s getting to the point where you need 2 wallets…one just for “loyalty cards”. I often wish we could just get an implant, like our pets, that had all the information on it so I could just tap my forehead on the card reader!
Real loyalty is built by things like consistently meeting or exceeding my expectations, whether it the Dollar store or Saks.
Brave move from Albertsons, that suggests they are already missing a huge trick. Surely the value in a loyalty card is only partly in encouraging repeat business (by ostensibly offering rewards for loyalty), but mostly in gathering consumer data, and feeding that back into the system. (Your recent ‘toon was really spot on on this).
As a consumer, I assume that’s what I’m signing up for, and get a bit miffed when I don’t get well targeted advertising (and savings) to compensate for the wallet bulk.
The worst example of customer loyalty programs is PetSmart, who requires customers to scan a card just to get the advertised price on an item. No card and you pay full retail. Using the card has no other benefit – no reward points, special coupons or anything else.
The best example is Krogers. Some specially priced items require the loyalty card, but the loyalty card and the store VISA card are combined on one card that also offers reward points. I accumulate reward points on gas (purchased at a Kroger pump), and receive real money to spend at the store. Just received $50 in vouchers that I can use to purchase anything in the store, and at times have received over $100. The program has been modified at times – I used to get more fuel points per dollar. But still overall the best reward program I know of. And I’m always going to buy groceries, right?
It really comes down to value. PetSmart should just abandon their program and offer their advertised prices to anyone. I’d still shop there without the card.
Spot-on Marketoon. I was asked by a cashier recently if I wanted to apply for their program, and I declined because there was a line of people behind me that I did not want to hold up. Even though I said that’s why I didn’t want to apply (and politely suggested that the cashier would be better off asking when there isn’t a line), she still tried to push the issue, saying “it only takes a few minutes.”
I often view these loyalty programs as “forced” market research in a way. Sure, we are not technically forced, as we don’t have to participate. However, they are basically telling us, “If you want to pay the lower prices, you have to let us track your purchase patterns.”
Rod J says
Wow, it seems like loyalty programs go through phases. I grew up in an era where S&H Green Stamps and other loyalty stamp programs were all the rage. Licking stamps is no easier than trying to figure out the ins and outs of most loyalty programs.
I absolutely hate them and tend to shop where they don’t exist.
Mike Brooks says
Alert…we are a payments and reward company and the best example I have to answer Tom’s question is a program we created.
When we looked at using our payments platform to create a loyalty program that would keep money in local economies, we identified the objective of balancing everyone’s economic goals in a way that would be self-sustaining. We settled on a program structure that is merchant-based and allows all elements of a community; its merchants, people, and non-profits/charitable causes of all sizes to help each other succeed. The economic core is a dual cash rebate offered by the merchant. She decides the percentage and can change it when ever wants to to drive traffic, etc. 70% the rebate goes to the shopper and the merchant’s charitable cause of choice…but each shopper can change on-line to support what is import to them.
Example of how this adds value beyond discounts. Consider a merchant in the program being asked for a donation. The merchant would give the organization a batch of cards. She would tell us the number sequences on those cards. We would code the cards with the group’s information. The cards are passed out to supporters and when the card is presented at either the merchant who gave out the card, or any other merchant in the program nation wide, the local cause group accrues non-restriced donations.
By creating a platform that extends a lot of control to everyone, more universal value can be offered. If you are wondering about the remaining 30%…this is used to cover transaction costs, sales and administrative costs and profit.
I experienced this at Bobby’s Burger Palace in Paramus NJ last Saturday. The line was out the door and there was only one person taking care of customers, but the cashier kept pitching the loyalty program to everyone slowing the line down. By the time folks got to the register, they were so annoyed that they were not receptive to the pitch.
Phil Rubin says
Consumers are not looking for another loyalty program to participate in but rather the other way around: for brands to be loyal to them. This means recognizing them, paying attention to them and acting accordingly.
The beauty of this cartoon is that it illustrates that most companies view these types of programs as afterthoughts rather than a way to actually (and ironically) enhance the customer experience such that it’s good for the consumer and for the business.
With the advent of “big data”, firms shouldn’t need an explicit loyalty card to know who their best customers are. Give them a channel to engage with the brand outside the register, and reward them at the register. It could be as easy as swiping your payment method at the beginning of the transaction instead of the end.
I think loyalty programs are like anything else in marketing- one company comes up with the idea, others jump on the bandwagon, then consumers have burnout. At first, I think it helped to bond consumers more to the brand, making them feel like a “special customer” but now it doesn’t feel so special. Stores now need to come up with a way to make consumers feel special again if they want to attract them to the store/keep them from shopping online.
Let’s just keep this simple. It’s the brand that is supposed to create the loyalty, not a program. Loyalty programs are just disguised price reductions designed to undermine genuine competition between brands.
Robert Piller says
I have worked with companies nearly 30 years in designing and implementing loyalty programs– and have seen the good, the bad and the ugly.
An effective loyalty program must be unique…not another “save 5%” or “Buy 5-Get 1 Free” offer. Too generic and lame — and not effective.
The ones my clients have had the most success with are ones that offer a free gift after so many purchases–but a unique gift–not something that is on the shelf or seen as an afterthought.
Also, it is critical that the employees are properly trained on the program–so they can handle it well and quickly. Untrained or uniformed staff is the quickest way to kill a loyalty program.
I’ve found that when I have a deep relationship with a business, especially a local one, I get discounts and better service without having a loyalty card. Case in point: This weekend my family and I were at our local 7-11 getting a Slurpee like we do at least a few times a month in the hot summer. Well two kids came rather quickly, grabbed two Mediums ones, flashed some coupon from their loyalty app and walked out the door. As for us, the worker changed out a flavor my son really wanted and even let us drain out the red dye from another so my daughter with a red dye #40 allergy could have hers. In return we had great conversation with the employee who thanked us for not yelling at him and we went a step further and bought food too. We must have spent 45 minutes that time in the store! Whenever we go back they always give us great service and we show our thanks in return in spades. When everyone has a loyalty card or app, nobody’s special….except for the loyal repeat customers.
Americans are certainly better at this kind of thing than in the UK. Theres certainly a more genuine way of doing this sort of selling but it has to feel natural. For the most part its a top down hard sell that makes the assistants day more complicated, that means less smiles all round.
It reminds me of a similar issue with my first job many years ago in a coffee shop: the sugar was not given out to each customer but placed on a separate stand. The end of the transaction was were I had to say ‘…and sugars on the side behind you’. It was most often than not followed by the question, ‘oh, wheres the sugar?’ people blank out anything from shop assistants thats this uninteresting. More than 10 years later, that coffee chain still does this, people still ask where the sugar is.