Customers Are Fed Up With Loyalty Cards

Gwynne Young
Managing Editor, CustomerThink
Member

Posted 03-May-2005 10:17 AM
A report commissioned by Impaq Group suggests that more than 50 percent of U.K. consumers are fed up with loyalty card clutter, feel that loyalty programs should be about more than just redeeming points and are looking for retailers to reward their loyalty with real customer service innovation.

Is this a surprise to anyone? I imagine the same research conducted on an American customer base could find much the same results. What do you think?

Paul Sweeney
Member

Posted 05-May-2005 12:17 PM
Absolutely!

Every retailer seems to think theirs is the only card the customer needs to carry. I now need a wagon to carry all of the cards I have been offered and now ignore.

If you want loyalty, provide good service and good prices without the card. Adding the card means that I am doing the work of differentiating myself among your customers. That is not my job and it does nothing to "reward" me. In fact, when I don't have the card and am not provided the "benefits", the program is now working against you because I am a loyal customer but you are not treating me like one.

Keep it simple! Remember good old fashioned service and competitive pricing always work. "Loyalty" programs might be easier to do but they have their costs too!

Gwynne Young
Managing Editor, CustomerThink
Member

Posted 17-May-2005 02:36 PM
I'm with you. I have a number of frequent-buyer cards, and I don't mind using one of them when I happen to be at the respective store. If I get extra points for doing business where I'd do business, anyway, all the better.

But do I go out of way to patronize the store with the loyalty card over another? Not really.

Product line, location and hours of business are more important to me. And, oh yes, it helps if I'm treated well. I won't necessarily stop doing business with a company if it gives me OK service, but I will avoid it like the plague if I feel I'm mistreated.

J Wakeley
Member

Posted 20-May-2005 12:00 AM
I was interested to see the number of people who are dissatisfied with Loyalty cards. This is consistent with a survey we conducted with a very large data house in the UK with their opted-in consumers. Over 50% stated they were unhappy with their loyalty card, except for owners of the Boots Advantage card. Asked another question 'would you prefer money off, or vouchers', over 60% said 'money off' and if you stand around a check-out in Sainsbury's in the UK, most people will have the money off, not add points to their card—though I would be interested to see the statistics from their loyalty provider as I am sure they woudl disagree with me!!
The key issue at play here is, I believe: Who is being loyal to whom? The consumer to the company, or the company to the consumer? If you look at how the purchases translate into points, you have to spend $1.80 (one pound UK) to get 2 points in many schemes. Now work out how much you have to spend to be able to redeem the points for something useful. Looking on the nectar.com website this morning, I see that a Playstation game 'need for speed 2' is 8,000 points. In other words I have to spend 4,000 pounds or over $14,000 in order to buy a $40 game!!! No. Do the maths, this isn't loyalty, or if it is, it is not in the favour of the consumer. In order to be awarded those 8,000 points, at an average purchase of (say) $28, you will have made 500 purchasing decisions, and therefore provided considerable value to the business. I don;t necessarily think that a game that retails at $40 is a fair exchange...
As a result, the world is looking for a way to get and give something back, immediately, where the upper hand is with the consumer and not the retailer. It's worth looking at what http://www.valuebond.co.uk in the UK are aiming to do throughout Europe, where money is given back directly to consumers for purchases, as well as to charities—something most of the loyalty schemes do not provide for, with some notable exceptions. The amoutn of rebate is also better than many loyalty programmes as well.

Howard Schneider
Member

Posted 27-May-2005 06:58 AM
Clearly, formal loyalty schemes (i.e., structured programs with earnings and rewards) have limited utility in today's marketplace. But the need to build loyal behavior and maximize customer lifetime value is ongoing. Businesses should develop creative strategies to drive loyal behavior and maximize customer lifetime value, in ways appropriate to their unique brand, product and audience. Cookie cutter loyalty card programs are not passe—but they are increasingly inappropriate to the needs of today's marketers and consumers. To learn more about the latest approaches to customer loyoalty, please e-mail me at howard@metzner-schneider.com, or visit our website at www.metzner-schneider.com.

Exchange Synergism
Member

Posted 23-Mar-2006 03:48 PM
Interesting discussion, but I fear that there is a dearth of fact base here. Recently we have been analyzing the "loyalty" (or more aptly) rewards programs of a financial services company.

We have been able to calculate the impact of these programs on retention, activation and utilization of credit cards objectively. The result: there is defintely a real benefit to loyalty programs, and it is measureable. With the results of the analysis we can identify with some precision the return on loyalty cost.

Anyone else been doing this quantitatively ?

We hope to publish an article on this (with suitable disguise of client information, of course) on our website in due course for those interested: http://www.exchangesynergism.com are our coordinates.

David McNab
Exchange Synergism Ltd.
http://www.mscforum.com