Is is loyalty or buying customers?


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We all have those loyalty cards hanging from our key rings as we make our way to CVS, Starbucks, and anywhere else we can get a discount or two. As a consumer, we know that as long as we carry these pieces of plastic, bargains await us. Business owners assume we use these cards as a symbol of our commitment to their product and/or service, but what if that isn’t exactly the case? What if consumers are programmed to like a particular business or service, simply because of the free swag?

There are two ways a business can grow – either by customer acquisition or by getting more business from loyal customers. Business models have repeatedly proven the latter less expensive, which is great for the business, but what about the consumer? When is loyalty gained and when is it bought? What separates a bargain-buying, commodity shopper from an actual committed customer?

Let’s look at the Starbucks loyalty program as an example of a company that seems to be getting loyalty right. While some can argue that many of the loyalty customers may be there for the free birthday coffee (see the image below) the numbers which I go into in detail in my new book Leading the Starbucks Way simply don’t lie.

More than 4 million participants enrolled in the Starbucks reward program globally, the integration of loyalty cards in the Starbucks mobile app and mobile pay platforms, and a closed loop system which allows leaders to offer rewards and gain access to consumer purchase behaviors, demonstrates that Starbucks’ loyal customers are not ones that are bought, but rather ones that were earned.

Even without the loyalty program, Starbucks is seen as a leader when it comes to creating desired customer experiences. They consistently give their customers a sense of belonging and fulfillment with each brewed beverage served. The earned loyalty rewards are simply added experience enhancers!

It is safe to assume that if they were to take away the loyalty program (and the free perks of perked coffee), or even simply make changes to it, the majority of that 4 million will remain Starbucks customers. This is an example of how building relationships with your customers, and constantly feeding and engaging those relationships, will lead to repeat and loyal customers, instead of just throwing complimentary items at them.

Now, take a look at that key ring of yours or your wallet filled with plastic loyalty cards and ask yourself: Is this loyalty program bribing me to love this company’s products, or do I really feel a sense of belonging with this particular business?

It may be time to lighten your keyring or wallet and start to evaluate what relationships you wish to keep. How do you feel when you walk into a particular business? Would you still come in on your lunch break if you didn’t get a free croissant with your coffee purchase?

Evaluate whom you let into your loyalty-program life and cut some of the extra weight. Moreover, as a business owner, ask yourself if you are buying customers or earning loyalty….

Republished with author's permission from original post.

Joseph Michelli, Ph.D.
Joseph Michelli, Ph.D., an organizational consultant and the chief experience officer of The Michelli Experience, authored The New Gold Standard: 5 Leadership Principles for Creating a Legendary Customer Experience Courtesy of The Ritz-Carlton Hotel Company and the best-selling The Starbucks Experience: 5 Principles for Turning Ordinary Into Extraordinary.


  1. Joseph, Nice article and I mostly agree with your position and would like to add some points. As co-founder of Preferred Market Solutions, I’ve been providing loyalty solutions to small and medium businesses since 1997. On the surface, it’s all about rewards, discounts and offers – very true. However, the real power of loyalty systems lies with the customer engagement that can be achieved if these tools are implemented properly. In fact, it’s quite possible to implement a successful loyalty program without ever giving anything away! First and foremost, the loyalty program provides a means for the business to collect information to know who their customers are and how they shop. Secondly, it allows them to engage both in-store and out-of-store with their customers. Simply keeping customers informed about your business builds a relationship and keeps you on the customer’s mind. Private sales days or early pre-sale specials for members helps as well. Of course, a certain level of rewards, offers and discounts is at the forefront of consumer expectations, but that does not necessarily have to be the driving force behind a successful loyalty program. Brett Perlman, Preferred Market Solutions, LLC


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