If you are considering a loyalty program or already have one in place, I can only offer one word of advice: stop.
Loyalty programs are a waste of time and resources. In today’s business world there is no such thing as loyalty. We conduct business in a world and live in a society where it’s acceptable to find and take the better deal, period. We find a better price, better feature, more interesting function, unique methodology, better service levels, and we make a change. It’s not personal, it’s just business.
What’s even more aggravating is when these programs try to measure loyalty. If you want to determine loyalty, try asking your customer or client if they would stay with you if they could get the same product or service for 50% less somewhere else. One of the more popular measurement programs, Net Promoter asks, “…how likely are you to refer a friend?” The answer to this might measure how much faith your customer or client has in you at the present time, or their current level of satisfaction. But go ahead – miss a deadline, mess up an order, or over-charge them and see how quickly they switch. I can’t imagine a scenario where a company would remain loyal if presented with enough benefit to switch.
Loyalty can only be measured by what someone will buy in the future. Trying to measure loyalty is like trying to predict the lottery numbers. Can’t be done. You can’t see into the future to predict behavior in an unforeseen set of circumstances. Why bother?
In larger organizations, the entire procurement department is designed to eliminate or negate any amount of loyalty. Their decisions are based on quantifiable criteria or the bottom line, not necessarily how long you have been doing business and the depth of that relationship. It’s just the nature of business now. The likelihood the procurement department highly values loyalty in their long list of decision criteria is slim and none. Most times slim is out to lunch.
The best known loyalty programs – frequent flyer programs – are not really loyalty programs at all. They are reward programs where consumers get free stuff. I like free stuff. For instance, if I buy 10 tanks of propane from the local supplier for my gas grill, I get a tank filled for free. Great. Does it help that the shop has the lowest prices? You bet. If I run out of propane on a Sunday, when the store is closed, will I wait until Monday to fill the tank? No, not unless I want to have pasta instead of grilling the shrimp and scallops I bought. Rather than wait, I will go to the super market, where the propane is more expensive. I am being disloyal, or am I simply taking advantage of the convenience of hours of operation, or as you might point out – being taken advantage of? Will I return to my loyalty card propane dealer the next time? Of course. Eventually I will get my free tank of propane; it will just take longer. A loyal customer would wait until Monday and eat pasta. Would you? And yes, I should have checked the propane tank before deciding what to have for dinner, or at least checked it earlier in the week. Someday I’ll learn.
I know a consultant who has worked with an international client based in France for 10 years. When the time came for the next logical step in the engagement, suddenly the client couldn’t be reached and stopped returning phone calls and e-mails. My consulting friend was finally contacted and told “Please don’t contact us anymore, we are no longer in need of your services.” Rude? Yes. Unprofessional? Undoubtedly. Then he learned the company hired someone else at half his rate because they were having “financial issues.” The company didn’t even have the common business decency to call the consultant, explain their issues, and ask if he might be able to continue with a different fee structure. After a 10 year relationship, they reduced their history to an afterthought. There is no such thing as business loyalty. In fact, this is the polar opposite of loyalty. Sometimes there isn’t even common business courtesy. Or maybe it’s just the French way of doing business.
Don’t waste your time trying to create loyal clients through some structured program. You will create a better relationship with your clients by focusing on improving your products, services and people. If you want to keep the clients you have, keep adding value to the relationship and delivering more value than the money you receive. Clients want to know they matter to you, they mean something, they are important. Make them feel special and important and you will keep them longer than any structured program.