On Lipstick and Pigs: Sales Promotions and Customer Loyalty

Steve Yastrow, over on the Tom Peters site, asks if a bribe can lead to loyalty and whether 'loyalty programs' can deliver loyalty.

Well, Duh, as you Yanks like to say (I prefer 'D'ohhh' a la Homer Simpson, but not quite the same meaning, is it). Anyone who's been paying attention for the past few years - and apparently that's not a lot of people - could have told you these basic marketing rules:

1. Sales promotions are designed to create a short-term sales spike or smooth out seasonal dips in sales. They are a tactical tool.

2. In response to the perceived need for 'customer loyalty', sales promotions suddenly got dressed up in new clothes. Give the program a card for customers to put in their wallet, stretch the timescale out so it lasts, say, all year round. Call it a loyalty program and what have you got? Well, to borrow from a political debate in the US at the moment, you've got a pig with lipstick on.

I wrote an article for Marketing Week a couple of years ago pointing out that most of the loyalty promotion, card-based programs and schemes are just sales promotional tools in disguise and can't/won't ever deliver customer loyalty.

Steve Yastrow puts his finger on it when he says that most so-called loyalty schemes encourage repeat purchases, and that's not the same as loyalty. It's still just a transactional relationship. And a transactional relationship isn't really a relationship at all.

On the other hand, just to be Devil's advocate, here...If you can keep millions of customers coming back for repeat purchases through ongoing discounts that lead them from one transactional encounter to another (as Tesco does with its Clubcard, probably the nearest thing to a genuine 'loyalty' program there is among the card-based schemes), who cares if it's real loyalty or not? The end-result is the same.

Suddenly that pig's not looking so unattractive after all.