The Loyalty Rewards Program Disconnect

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The primary purpose of a loyalty award program is to encourage customers to continue to shop at or use the services of businesses associated with each program.  I’m surprised that when most associates are handed a loyalty card it’s as if the customer is giving them a widget. Golden opportunity missed! Rarely are associates trained on how to supplement the loyalty rewards points by reinforcing customer loyalty.

According to Bond Brand Loyalty, which conducts Reward Program Loyalty research, consumers belong to an average of 13.4 loyalty programs, but are active in only 6.7. Loyalty programs are considered by most corporations an important incentive for consumers to purchase from the same brand or company.  A good example, I think, are airline reward programs; definitely have a significant influence over which airline I choose. However, in most other industries, while the incentive exists, it is lacking and there lies the opportunity to leverage the human connection.

Loyalty programs can be easily replicated.  As we all know, competition is fierce. The most competitive combative weapon and differentiator is the human-to-human connection. Many consumers shop based on location and price – the closest drug chain or food store. But there are always choices and a rewards program can make a difference. I’m a member of CVS’s Extra Care Savings and Rewards Program, which offers me savings almost every other day. I receive emails, coupons, and texts. Some of the coupon reimbursements are quite substantial. However, when I shop at CVS, it doesn’t appear that the associates behind the counter are trained to associate the connection between the reward program and the customer.  There is rarely an acknowledgement or a thank you extended to a loyal customer.  I leave the store with my purchases but nothing else.

These are my suggestions for correcting “Loyalty Rewards Program Disconnect.”

  • When a customer hands the associate their loyalty card or number to an associate or the enters their card number into the terminal, the associate should always say, “thanks for being such a loyal customer.”
  • If the customer mentions this is their first transaction or the associate has access to that information, the associate should make the customer feel especially welcome. Ask the customer if they have any questions about how they program works. Ensure that associates are trained on the most common questions and appropriate responses.
  • Have the associates highlight the savings at the end of the transaction; it helps to reinforce the value of the loyalty rewards program. If there are no savings calculated, the associates should explain why.
  • At the conclusion of the transaction, have the associate state their name even if they are wearing a nametag. It helps personalize the transaction.
  • When handing the bag back to the customer, say, “Mr. Smith, have a wonderful day and it would be great to see you the next time you are in the store”. Have the associates tell the customer their normal working hours. That will also convey to the customer of feeling of being wanted.
  • For those consumers that aren’t members of the company’s program, have the associate ask them if they would be interested in joining. Tell them it’s an easy process that could save them money, but equally as important, you (the associate) values their business.

Loyalty programs are a benefit to customers. Ensure all of your company’s associates are trained to make each customer feel welcomed, important and valued whether their company participates in a loyalty rewards program customer or not. When the neighborhood stores were the only game in town, local merchants didn’t need incentives to get repeat customers. They used personal connections. Again, competition is intense. An effective fire-wall a company has is to educate staff on the value of building human connections.

What other suggestions do you have to make Loyalty Reward Programs more effective by leveraging the human connection?

7 COMMENTS

  1. Boots UK (formerly Boots the Chemist), the largest pharmacy chain in the United Kingdom, made certain that their loyalty initiative would be successful by making employees members of, and ambassadors for, the program. That way, store personnel could promote it and support it with sincerity.

  2. Hi Richard: essentially, what you are advocating is a two-tier approach to customer experience, where the Have’s (loyalty members) enjoy more overt retailer gratitude and better treatment, while the Have-not’s (those who aren’t members) get served, but not in an exceptional way. If loyalty club members cluster demographically, I can see this causing community relations issues with retailers where it might appear that some demographics clearly get better treatment, while others don’t. After all, retail checkouts are public, and everyone now carries a video camera.

    While I have grudgingly accepted this reality in air travel, I’m not feeling good about it happening at my drug store, grocery store, and other places where we buy our every day goods and services. Maybe it’s the bleeding heart liberal in me, but this smacks of a caste system, where those who can afford to spend more or shop more feel welcomed and get treated with common courtesy and respect. It seems the rapport you are advocating should be granted to anyone, regardless whether they frequent the store twice daily, or are stopping by for the first time.

    My wife and I have season tickets to the Washington Nationals, and I have found that game after game, the fan experience has been consistently wonderful. The stadium offers the same friendliness to all fans, but offers a few perks to season ticket holders that we enjoy, notably, a security gate reserved for season ticket holders, which helps us avoid longer queues. To me, offering a special resource seems a better way to show appreciation, rather than withholding courtesies that really should be available to all. In your example, what about offering a dedicated checkout lane for loyalty members during peak hours?

  3. Hi Michael, thanks for sharing the company information about Books UK. I will have to look into it.

    Andrew, you are right. I never appreciate a two tier service delivery system. However, I know that the majority of all customers who shop at CVS in this particular location are members of the rewards program. It doesn’t cost anything to join and it does give you great value. It sounds like I should let the CEO of CVS know about Book UK (Michael’s suggestion for having ambassadors).

    Have a wonderful weekend. Richard

  4. Hi Richard, isn’t the disconnect that you describe even a bit deeper? What we commonly refer to as loyalty programs is effectively nothing more than a rewards program. In contrast to loyalty these programs set up barriers to leave by an incentive (lower price) instead of making their customers want to go there, which is ultimately what should be wanted by the brands (less erosion of margin).

    2 ct from Down Under
    Thomas
    @twieberneit

  5. Hi Thomas, thanks for adding to the conversation. Reward programs are valuable and loyalty without rewards is even a stronger metric. To me, it still makes sense that there is more of a common thread between the points and people feeling a bond to the brand. Richard

  6. Hi Richard, agree that there should be some reward for loyalty. I also agree that reward programs are/may be valuable, too.

    On the other hand loyalty is a two way street. The challenge and disconnect that I do see is that what is dubbed a ‘loyalty program’ is regularly not geared towards loyalty. Loyalty is more of a bond than accepting – or even worse: expecting – the next discount. From a business point of view this discount/reward scheming also has the risk of sliding into an everyday low price scenario.

    Example: A company around here has its VIP club. Being a member makes you eligible for a 10% discount. Guess what: more than 70% of all transactions are membership transactions. And of course, if you forgot your card, you got a new one. Am I loyal to the brand or to the discount here?

    Another example is basically a whole industry: Airlines. This is not loyalty, this is ring fencing the customer. Similar things apply. Air travel is bad enough as it is, so I am loyal to the few and far in between perks (like eligibility for a front seat without additional price, lounge access(!), better head phones, do airlines still give complimentary upgrades?…)

    I think that there is a lot of mixing of the different concepts out there, which should get set straight. Not in the least I see us consultants being responsible for contributing here.

    2 more ct from Down Under
    Thomas
    @twieberneit

  7. Thomas, thanks again for your thought-provoking questions. I totally agree with everything you have written or questioned. My hope is that companies realize that a specific human connection can never be replicated and ultimately is the strongest bond. It is a statement that is definitely easier to say then to implement on a large scale. Have a wonderful weekend. Richard

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