Why Don’t Loyalty Programs Drive Loyalty?


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I travel a fair amount for business; throughout the U.S. and Canada regularly, Europe fairly often. I’m not a dream customer for particular airline and hotel brands, however. While not a price shopper, neither do I overindulge. What hooks me is the best value, which I generally calculate as the lowest reasonable price + best seat/room. For example, business class is great on longer trips; first class, however, is (usually) a waste of client money. What this non-strategic approach to travel booking has netted me is one platinum, a couple gold and a half-dozen “silver plus” memberships in various airline and hotel loyalty programs. In most cases, what I get out of the relationship is pretty clear. But for those companies that breathily announce my “arrival” at silver elite level, the returns – from my perspective as a customer experience management consultant – are more opaque.

When Loyalty Programs Annoy: Setting Expectations They Don’t Deliver On

First, my job as a customer experience consultant is rooted in boosting loyalty. At the end of the day, the primary reason any company invests in customer experience is to drive loyalty-like behaviors; greater retention, increased price sensitivity, positive word-of-mouth, etc. So I wonder what companies like Marriot actually accomplish when they spend the time, energy and money to enroll me in a program that actually kind of annoys me. Don’t get me wrong – the thought is nice. But if being a “Marriot Rewards Silver Elite” member doesn’t actually give you anything of value, why would they bother? In the last month, I’ve stayed at a J.W. Marriot resort in Arizona, where I spoke at a banking conference. The week before that, I stayed at a Marriot near Seattle, where I’ve stayed at least 4 times before this year. Along with Starwood and Hyatt, I decided to ask some questions about my benefits when I checked in. The dialogues were all predictably similar:

ccardReception: “Welcome Mr. Hinshaw, thank you for staying with us. As a Silver Elite member, you’re business means a lot to us.”

Me: “Thank you; I appreciate that recognition. Can you tell me what I’ll get beyond my room as a result of my status?”

Reception: “We value all our Silver Elite members, and you do get Elite-only rewards as a result.”

Me: “Great! Is my room on the club level? Or – did I get a suite?”

Reception: “No…”

Me: “Oh. So what’s the code for in-room Wi-Fi?”

Reception: “I’m afraid we can’t offer that… but if you do logon in your room, you can accept charges by entering your name and room number…”

Me: “Maybe a drink in the bar, or coffee in the morning…?”

Reception: “No…”

You get the drift. By offering me something that has a high perceived value (“Silver ELITE status! Wow!”) Marriot (and I don’t mean to single them out; this is common “Loyalty Program” practice) did a great job breaking a cardinal rule of customer experience. If you are going to set customers’ expectations, you’d better be able to meet – or beat – those expectations. And to do that, you must know what those expectations are.

To Meet my Expectations, You Need to Know What They Are.

As I’ve said before, the concepts behind customer experience are pretty simple. Good experience occurs when expectations are met or exceeded; poor experiences occur if they’re not. No matter what products or services you sell, the way your customers feel about the experiences they have with you is based on their expectations of what those experiences should be. By setting countless customers up with an inflated expectation of what a “Silver Elite” membership means (you’ve got to admit, it does sound kind of special), loyalty programs like these might actually be decreasing customer loyalty. It would be interesting if the Marriot’s of the world took it upon themselves to ask their customers what expectations they had of their various loyalty programs – and tailored those programs to give customers what matter to them. We’ve done this – (re)calibrating loyalty programs to customer experience – in a few different industries – and the payoffs are huge.  By aligning loyalty programs with the true drivers of loyalty (nope, points don’t do it), they could create member-only experiences that drive their best customers closer.

Delight and Surprise Your Customers, By Giving Them Things They Value, and Don’t Expect

For example, save a great deal of money in program administration and staff training (“How do you best deflect member inquiries regarding program benefits?”), and just give everyone the same points. Then “delight and surprise” your most valuable customers (like me) with the occasional unexpected upgrade to a suite, or free Wi-Fi and a drink coupon. These kinds of “delighters” represent bonus characteristics that customers don’t expect, but that DO drive loyalty. At core, a loyalty program is no different than any other aspect of the experience; it’s one of many touchpoints that influence customer perceptions, and affect customer experience. Those companies that consistently deliver great customer experiences, and profit from doing so, are those that best understand customer value, wants and needs on a granular level. Put another way, it really doesn’t matter if you give me silver or give me gold – as long as you give me what I want, and expect (or surprise and delight me by giving me more).  By focusing your loyalty programs on improving customer experience, they can actually drive loyalty… This blog originally ran on CMO.com, where Michael Hinshaw writes the weekly “Get Customer-Centric” blog.

Republished with author's permission from original post.



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