The Loyalty Industry

Customer Loyalty Comes from Conversation

By Valeria Maltoni

What if instead of focusing on loyalty programs, companies focused on customer rewards? The best reward of all being a loyal company that looks out for its customers, understands their needs, and works in alignment with partners to deliver on them.

How many loyalty cards do you have in your wallet? Do they work for you or are you working to get anything out of them? Often at the (company and personal) cost of the very thing they were created to promote - loyalty.

Conversation leads to brand experience, which in turn may lead to loyalty. Card or no card, a reward for many customers today is often a prompt customer service rep who seeks to listen and understand what is needed and has the ability and company back-up to make it happen.

Some issues with loyalty programs are:

• the use of monetary rewards to encourage repeated purchases - are a convenience, not an indicator of long term behavior. Customers will buy brands interchangeably when presented as offer, and revert to their preferences when not. There are other ways to target pricing, an example of which I wrote about in who gets what and why?

Work on understanding what your customers value, instead. IKEA for example, is in a very tough retail business, yet the company manages to be anything but flat when it comes to customer loyalty. The whole store and product experience reward. That's what I call brand equity.

• the wait time to realize a gain from being loyal - and then on top of that there are usually penalties and costs associated with using the points. We do live in an instant gratification marketplace. Also, the more distance you create between the product or service reward and the customer, the less likely the program will work.

Work instead on decreasing barriers between what you sell and what customers want to buy by building quality, value and convenience right into the product. QVC does a good job with that. Former president and CEO of QVC Doug Briggs said: "We don't bombard customers with special offers or coupons to build loyalty, because it's easy for them to switch to the other guy's coupon. We focus on customer communication and satisfaction. For us, it's about building trust and developing long-term relationships. If QVC has earned a customer's trust, we believe they will buy—over and over again."

• the message that some people are more special than others - will be counter productive especially with the increased peer to peer conversations. What a company gets out of the program is the data on customers use, spend, etc. Yet they do not seem to connect that data to the way they treat those customers. And today there are ways to make everyone, not just a few, feel special on the basis of that data.

Work on executing flawlessly on the basis of what your customers love (and value) about your brand. I wrote about how Anthropologie thrives through product, presentation, and people. Another example is Southwest airlines - they're coming to Minneapolis, BTW. I will fly Southwest for the first time when I go to SxSWi, I will let you know how that goes.

The way to a customer's heart is much more than a loyalty program. Making customer evangelists is about creating experiences worth talking about. Today at Fast Company expert blog we talk about how to upgrade your customers' loyalty.

I used to do a lot of shopping at Benetton stores, so much so that I often received a thank you card from the store manager. They had my address. Yet, when they pulled out of Philadelphia, nobody bothered to tell me. A missed opportunity indeed. That conversation would have further cemented my loyalty - especially since I do travel a lot.

On the success story side, all I have at the moment is Apple. What companies hve earned your loyalty? Does it go beyond a card? I suspect it does. What do you look for in a rewards program?

[loyalty card by Kake Pugh]