Promoting loyalty…or not?

Maybe it is just me, but it seems like there is a significant rise in store loyalty programs within the last year or so.  And being in marketing, I completely understand having a loyalty program in place and all the benefits that go along with that– For customers: Rewards for purchasing products they already buy, early notification of deals and events happening in stores, and special discounts for members.  For the store: increase traffic to your store, retain existing customers, build a bigger customer base, encourage consumers to choose your store vs your competitor, measure and track spending habits and allow you to adjust your product offering to meet the needs of your customer – just to name a few.  But, is the implementation of a loyalty program really helping to make customers “loyal” to you??

Based on an article from April 2009, loyalty programs were up 24% from 2007.  I can only estimate from my own experiences recently that this is up even more in 2011.

Let’s take the last month for example.  I went to Panera for lunch one day… When I was at the counter the cashier tried to get me to sign up for the rewards program that is new.  Being in sales when I was younger and in marketing now, I listened to her whole speal about the rewards card, what I had to do, and the benefits I would get.  In the end I wasn’t really interested– yes, I really like Panera, but don’t often go there for to eat,  really didn’t need to have another “rewards card” in my wallet and didn’t really feel like I would eat there enough to earn rewards that would make it beneficial to me.  So I politely declined.  She did not really take that at all.  She instead scanned the card anyways and informed me that I needed to go online to register my card and then finished my transaction.  Later that week, I tossed the card out since I really didn’t want it anyways.  Three weeks later while out with a group of people from work, we stopped at Panera for lunch and it was much the same experience.  I tried to explain to her that I “already had a card” and didn’t need a new one.  Then she wanted to find it with my phone number—which would have been impossible since I didn’t register my card and didn’t want it so I didn’t keep it.  She did not seem happy with that and then wanted to give me a new one.  Unlike feeling like a respected customer of theirs, I feel like they are FORCING me to be in their rewards program which is now causing me to want to go on a Panera eating strike for awhile.  This is not a good customer experience and does not really promote the loyalty reward card in a good light.

Panera is not the only place that this happens… I was also shopping at Staples one day and was asked as I was checking out if I wanted to be part of their loyalty program.  Again, I politely declined and she scanned the card anyways, stuffed it into the bag and informed me that I needed to register it online.  When I got home, I threw the card away.

One thing that businesses need to learn is that when you have a loyalty program, customers have to WANT to be in the program for it to be successful.  You can’t force a customer in your store to join the loyalty program.  These types of customer experiences tend to produce the opposite results that you are looking for.  Instead of having a loyal customer who chooses to shop at your store vs. your competitor (even if your price is a little more), you now have a customer who intentionally will pass by your store to shop your competitor.

In today’s world, the world of online and social media, the customer experience matters more than it ever did.  Back in the day, before the internet, if someone had a bad experience in your store they may go home and tell their family and a few of their friends and it stopped there.  In today’s world, when a customer has a bad experience, they go online and tweet about it, post it on facebook, and send an email to your customer service department…all while still being in your store having the bad experience.  These tweets and posts are now out there for millions of people to know about in a matter of seconds…and in the end that affects your brand and your store, which could have all been avoided.

And what’s happening when non-loyal customers are enrolled in your loyalty program??  Companies are sending out more and more coupons in this economy and shoppers now know that they don’t need to buy things at full price when they want them… they can wait a few weeks and they can guarantee that they will get some type of coupon from some company to help with the costs.  Whether it is a dollar off coupon or a percent off coupon, consumers know that they will be able to benefit in some way.  And customers are joining the loyalty programs of a store and its competitors so that they can “shop” the competition…now “shopping the competition” is nothing new, but it certainly is easier with the online world today and the fact that everyone accepts competitors coupons.  Phrases that you hear are “Price match guarantee” and “We’ll match anyone’s price”… which in the end causes companies not to gain more loyal customers, but to throw away margin on their products.

Now, don’t get me wrong… many companies really know how to get people to sign up for their loyalty programs.  Take Jewel for example.  Jewel is currently at the end of their “Cookware for a Penny” promotion: when you use your preferred card you get one stamp for every $10 you spend.  You can later redeem stamps for cookware that you purchase for only a penny.  Funny thing is… you can also purchase the cookware separately, but no one does that.  Why?Because you already know that you are going to shop for groceries so you might as well get something in return for it.  But looking at how many stamps you need to redeem to get cookware: to get an 11″ non-stick stirfry pan with a lid for a penny, you need to collect and turn in 100 stamps.  100 stamps @ $10 spent to get 1 stamp, means you spent $1000 to get a stirfry pan for only a penny but you could have just bought the pan for $54.99.  The thing is… you know that you will spend at LEAST $1000 in groceries over the promotional time period (8/26/10-1/12/11) so why buy the pan when you can get it free?  Something like this makes you pass a Dominicks, WalMart or like store to go to a Jewel to pick up your groceries to get your stamps… cause you want that cookware. All I can say is BRILLIANT!

Picture from Allison’s blog…I wanted to take my own but when I ran across hers, I thought it was perfect.  If you have a chance, take a read here.

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One Response to Promoting loyalty…or not?

  1. hillary says:

    holy what! that’s a lot of plastic!

    they never manage to make it onto my keychain. but i carry the mini ones in my wallet 😀

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