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The future for loyalty

Loyalty just isn’t working.

While the statement may be a little sensationalist, to a large extent this is unfortunately true. In too many cases loyalty certainly isn’t working how it’s meant to.

Customers aren’t developing preferences for stores, aren’t redeeming loyalty points and are increasingly seeing loyalty as a chore rather than a privilege. Recent research from moneyexpert.com found that Britons are sitting on 4.25 billion pounds of unclaimed loyalty points, while Pigsback.com announced that over a third of consumers were annoyed because they had too many loyalty cards to carry.

This isn’t how it was meant to be. Retailers were meant to be left with a legion of loyal customers spending more and continually coming back. But something appears to have gone terribly wrong. Retailers set up these reward programmes and for some reason they simply aren’t enticing customers.

But it’s easy to see where things went wrong. Big companies have forgotten, or worse, never truly found out what their customers actually wanted from their loyalty programmes. Most loyalty programmes are far too insular in nature – customers are given a card and expected to redeem their points on whatever the retailer dictates, like it or not. And it’s clear that many don’t like it one little bit.

Companies need to start finding out what customers want and working out how to give it to them.

With millions of loyalty points floating around unclaimed there is a perfect opportunity for a ‘loyalty saviour’ to step-in. By creating a loyalty marketplace where consumers can trade and swap loyalty points around to secure desirable rewards, life could really be injected back into the traditional loyalty concept giving it back some of the marketing value to which it once laid claim.

Conventional, no-effort loyalty is dying a death and it’s up to those operating old-style loyalty programmes to change this. By letting consumers get what they really want they can get a bit closer what retailers have wanted all along:

True customer loyalty.  

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Comments: (2)

A Finextra member
A Finextra member 10 September, 2008, 12:50Be the first to give this comment the thumbs up 0 likes

I think Nectar was trying to do exactly that as a 'loyalty saviour' by giving the customer increased choice thru interoperability of points.

 

However, I suspect that most of the points languishing in customer's accounts is because those customers dont really care about these points. They are price shoppers, and would jump ship as soon as they see a better price.

True loyal customers do collect the points, redeem them and remain loyal.....well, most of the time !

A Finextra member
A Finextra member 16 September, 2008, 00:04Be the first to give this comment the thumbs up 0 likes

Mmmm...well the future of loyalty and loyalty points looks grim and the cause is due mainly to the unconscionable and persistent dilution of points value by issuing organisations. Another reason, of course, is that the issuing of loyalty points has become less and less a differentiating factor.

Loyalty in the true sense is not a one way street and it appears that over the last few years, companies have lost the concept of being loyal to their customer base. Gavin is right...it seems organisations have been looking over their shoulder at their competitors rather than focussing on their customers' needs.

I'm afraid that once you demonstrate a lack of loyalty to customers, the spin off is not just the loss of that customer but the cascading effect on that customer's circle of influence...leading to brand damage.  So hey, why not leave loyalty points alone now and concentrate on price discounting with a new brand?!  Now there is a novel idea!