Customer Development
By Tim Young
Yes, I am a consultant. A consultant focused on helping companies achieve greater loyalty with their customers. And so I have to admit, as much as I love trying to solve the challenge of generating loyalty, I strongly hate – maybe hate is a little too harsh – dislike many of the “loyalty” programs that are out there today.
Maybe they should be called profit programs instead. It seems like the focus is on profit before cultivating loyalty, so why hide behind a name? Then again, the joke would be on them, because loyalty programs that focus on profit usually end up not driving the intended long term results.
Don’t get me wrong, profit is the goal. But it should be the outcome of a good loyalty program not the focus. The key performance indicators should be around customer behaviors. The KPIs then keep your focus on the customer, and when they improve, they point to incremental profit that is sustainable.
So back to what I dislike about “loyalty” programs:
- Complexity – If I have to take out my slide rule to understand the conversion from price paid to points earned to redeemable for x value, it is too complicated. That goes the same for a salesperson having a card they have to refer to in order to tell you the value.
- Requiring a Card – I understand not every company’s point-of-sale systems can look me up via name or phone but I don’t want to stuff my wallet with a card for every loyalty program I belong to. I don’t want a Costanza wallet.
- Breakage – I’ve been on the inside where conversations take place touting how breakage makes the program profitable – how for instance, it would be detrimental to turn on the ability to inform customers at checkout that they have value to redeem. Wrong. The best programs encourage usage and focus on the customer. Over time, the customer will reward the company with more business and spread good word-of-mouth advertising.
- Programs without Benefits – You need to think about what you are trying to drive with you program; instead of finding benefits that won’t get used, are inexpensive or paid for by someone else, focus on your customer and find out what is valuable to them and then offer that as a benefit. Don’t give away the moon, but listing off 10 benefits that you know won’t ever be used is pointless.
- Fine Print – I know we are lawsuit crazy these days, and you have to protect your business. But other than the necessary legal, nothing else should get buried in fine print.
- Spam – I signed up for your loyalty program, and you spam me with email daily or sometimes even more often. Send me relevant email, and quit telling me “last chance” or “urgent” or “lowest price ever.” Either let me choose when you send me emails, or be conservative and send less. More email just gets me to unsubscribe.
I do love good loyalty programs, and they are out there. I am a member of one, and the value exchange has benefited both of us greatly since I became a member. Why? They are focused on the customer. My two favorite things: They remind me to use my value at checkout, and it's super simple to understand what value I am getting when I transact.
