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No, that’s not loyalty!

Posted on April 1, 2011 , by Steve Bernstein
Interesting news about the effectiveness of “Customer Loyalty Programs” from a recent study:

How many “loyalty” cards do you use

  • Percentage of Americans that feel the loyalty program makes them feel valued:  27%
  • Percentage of Americans that have heard from the program since signing up: 15%

These are horrible numbers.  While I love to hear about companies that value customer loyalty, we should be clear that loyalty isn’t be about locking-in customers through “points.”  Genuine loyalty generates positive word-of-mouth and cross-sell opportunities, while customer lock-in drives retention without positive word-of-mouth, and only until a better deal comes along.  And now we see that these so-called “loyalty programs” could also be creating detractors (unhappy customers), and not creating promoters (those that love you and tell their friends).
Genuine “loyalty programs” must deal with engaging your customers –often through your company’s front line sales and service associates – in the customer experience. Unfortunately, far too many companies seem more interested in watching what those front line employees do or say (“Your call may be monitored…”), when instead they should be more interested in what they heard.  I know there are companies out there that have some great practices in this area and go beyond scripting to actually listening…comments are appreciated!