A recent news story in the Jakarta Post reminded me once again that all business challenges are local, even when they are global.
The article details the issues merchants face in trying to maintain loyalty at a time when consumers are collecting loyalty cards as if they are coupons. Customers have learned to use different programs at different times, depending on the offer or price promotion.
Merchants, of course, are aware of these savvy tactics. As Satria Hamid, deputy secretary-general of the Indonesian Retailers Association, put it: “Customers have every right to apply for other loyalty programmes. But we are presented with new challenges now. Customers can discover, compare, evaluate and choose other brands solely on their merits.”
Several merchants are responding with programs that I’d classify as temporary solutions. One, for instance, is offering members monthly discounts and occasional major sales. Another is rewarding members with points for green activity (returning used packages).
These programs are born of good intentions, but they aren’t designed to fulfill the ultimate goal: enduring customer loyalty.
For starters, using loyalty as a price and promotion vehicle will only condition customers to purchase that brand when it is on sale. They will equate the brand with the discounts – not with a good experience, an emotional connection or any of the elements necessary to building loyalty.
Even worse, rivals can easily replicate a brand’s sales and promotions tactics. And in every industry, there are usually only one or two players with the scale and operations to consistently compete on price. All others are left fighting for remnants of business, not engaged customers.
A brand that wants to win loyalty should recognize what separates it from the others, what makes its customers love it, and build on that instead.
Once it has identified that shining, distinguishing feature, the company should think of new ways to add value beyond it. What complementary services or experiences will further wow existing customers, while attracting new, different consumers? Building added features into the loyalty initiative that support this premise will serve the company better, long run, than simply running promotions.
Winning loyalty is a universal challenge. The good news is that the solutions can cross borders. From Jakarta to the United States to Brazil, gaining loyalty is a matter of winning trust. And knowing more about your customers is a critical part of building trust.
