Let’s face it, for every 10 businesses that exist, 9 have some sort of rewards program. While they used to be novel and exciting, customers are now used to them. They may well sign up. But, far too often, customers do so not because they are loyal, but because they happen to already be at that business.
Too many companies use customer loyalty programs as a crutch, thinking if they give their customers something for free, or offer incentives, this will create loyalty. That viewpoint is wrong. A loyalty program is designed to enhance the customer experience and show the customer that you care about them. Often, loyalty programs aren’t as successful as anticipated solely because the customer experience falls far short of any reward the customer could possibly earn. Or the program presents customers with undesirable or irrelevant rewards and makes any that are desirable seemingly impossible to reach.
Well, if it’s not rewards, what actually does create a loyal customer?
An article carried by SmartCompany, gives an interesting example about a fish and chips restaurant that always gave customers an extra serving of fish. As customers got used to it, they started ordering one less than they actually wanted, knowing that the restaurant owner would give them an extra one – the exact amount they wanted. This practice actually had an adverse effect on the business and it ended up losing money while failing to create customer loyalty. Why? Because the reward became… well… not a reward, but an expectation.
To earn loyalty, the first and foremost item on your “to-do” list should be to create a great customer experience. Without a great experience, it doesn’t matter what rewards you offer. According to Chief customer experience officer and strategist of CXA, Cos Luccitti, who is quoted in the SmartCompany article, “Humans are complex, demanding creatures. We like free stuff, but it’s not what bonds us to a brand or business.” He goes on to state that answering the question of “how does the business solve my problem and make my life easier,” is the most important thing.
Loyalty programs have become integrated into our society. You probably belong to several. The fact is that many customers would find it odd for businesses NOT to have one. However, simply offering one, and having one that is fully integrated it into a company culture based on an excellent customer experience, are two completely different things – and guess which one wins?
Rather than trying to leverage your loyalty program to create loyal customers, why not leverage your customer experience first, and then use your loyalty program to reward them? That, is a winning formula.
Author: Michael Gorun
Michael Gorun is founder of Performance Loyalty Group, a technology-based owner retention and loyalty company. He has more than 25 years in operational service management positions for Ford, Nissan and General Motors. He can be reached at: firstname.lastname@example.org.