Friday, November 8, 2013

What is "Deal" Loyalty?

The Edgell Knowledge Network found in a recent study that actual brand loyalty among consumers of partner loyalty program is not any different than consumers who were not part of the loyalty program. In other words, there appears to be no significant difference in loyalty between consumers who were members of a loyalty program and those who were not. The same study found that approximately 81% of the members in a loyalty program did not fully understand the entitlements associated with loyalty nor how they could claim the program loyaoty rewards. According to the results from the same survey, the average consumer belongs to approximately 18 different loyalty programs.

It's been noted in this blog in the past that customer satisfaction is an instantaneous measure that reflects only the outcome.of a particular event.  Loyalty programs that provide points or rewards for a sinble transaction of some type are nothing more than relabeled customer satisfaction programs.. The idea of providing rewards as incentives does not create loyalty.  Some researchers describe this type of loyalty as  "deal loyalty" since it contains no aspect of relationship building and only depends on the "deal".  The customer is "loyal" only as long as the "deal" is offered.

True loyalty programs are built on the basis of establishing a long-term positive relationship between the company and the customer and is not accomplished with a single "deal" or even multiple "deals".  Loyalty of customers comes from the relationship between the customer and the company without the need for an instant reward. The reward is the relationship.

 Since there is no apparent difference in loyalty between customers involved in a loyalty program and customers who are not, the question is, why bother with that type of the loyalty program .  If the money spent on a loyalty program which provides points or rewards of some type were redirected to building individual customer relationships, the long-term benefit will probably be significantly greater.

The bottom line is that there is no shortcut to customer loyalty.

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