Loyalty Scheme or Bribe Card?

By  |  3 Comments

What every company wants is faithfulness from it’s customers, the promise that they will only be theirs. Some firms have even gone as far as bribing customers to be loyal, “If you carry on buying from us we’ll offer you discounts on lots of our products.” This is often disguised as a loyalty scheme.

In Pakistan there have been a few attempts at keeping customers loyal with such schemes for example the ARY Sahulat Card and the PSO Loyalty Card. There have even been tie ups between companies who have come up with products such as the PSO UBL credit card or the Caltex and Citibank card, where if you spent at any of these filling stations using these cards you will be rewarded.

How many of us only fill up from PSO so we can collect points? Does the loyalty card force us to drive an extra mile or two looking for a PSO station?

The reality is we use whichever station we come across or the one with the cheaper price. If we happen to use the PSO station we’ll use the card but most of us won’t drive to find the green crescent and yellow sun logo.

So are all loyalty schemes pointless? Imagine… you have thousands of customers and you know the names of every single one. Not only that but where they live, what they buy, whether they have children, how often they visit your store, how they pay for their goods and much more.  This is what a loyalty scheme has the potential to offer your company.

As marketers know, data like this often more valuable than gold because with this information you have the potential to market specifically to each individual customer, offer them products they’re going to be interested in, convince them to upgrade, or if sales fall on a certain item entice customers through discounts.

This sort of loyalty scheme is probably best suited for large retail firms who have regular repeat customers. This however doesn’t mean other companies can’t do something similar. If a company feels it’s loyalty scheme won’t be attractive to consumers on it’s own it could form a loyalty scheme partnership with other firms imagine if you received points for eating at McDonalds, filling up at Shell, shopping at Servis, banking with Habib and topping up with Mobilink, and you could then redeem your points with any of these companies.

But is it really loyalty or the opportunity to save money which attracts customers? As Janet Robinsons, CEO of the New York Times said, “Repeat business or behaviour can be bribed. Loyalty has to be earned.”

PSO must be commended in their bravery to take the first step, as it’s not cheap to run such a scheme, but now they must look at how to take it further and how to make their offering more attractive to customers, and to give customers a reason to be loyal.

** Here is an excellent illustration how important a loyalty scheme can become- Times Online: Every little bit of data helps Tesco rule retail

Asif is a Marketing Manager in the UK. His expertise and interests lie in Strategic Marketing, Marketing Communications, PR, Private and Public Sector Marketing, Online and Social Media Marketing. You can visit his website at www.asifafzal.com

  • http://www.linkedin.com/in/babarjaved Babar Javed

    A common misconception among key stakeholders is viewing loyalty programs as a gauge for a company’s commitment towards doing all it can to Improve customer loyalty.

    What they fail to grasp is simple that a loyalty program is a PART of your overall brand equity building strategy and it to say the east a team effort going outside the reaches of marketing alone.

    Incentives alone do not win over customer loyalty.

    Involvement of key internal players is not only crucial to be goal of a loyalty scheme but differentiates the feel from other companies. I believe KESC has done a fine job in this regard under leadership from Farees Shah, heading the distribution department in Karachi. From customer complaints, to repairs to research team, there is one singular and consistent message.

    At KESC, Operations, HR, Communications and marketing are all on board with one unified and agreed attitude to convey to the public. They have been order for instance to tell calling in customers that their electricity will come back later than the actual time for e.g. if they say 1:30am is the time your lights come back on, it actually means 1:15am.

    Its part of a change in culture as well to differentiate from a Pakistani norm of meaning 2 hours when we say 1 hour.

    It’s this kind of loyalty that generates high performance.

  • Asif Afzal

    I 100% agree with you about loyalty being gained through good customer service/ product quality and it being a team effort rather than just the job of the marketing department. This definately adds to a firms brand equity.

    However in my personal opinion I think most loyalty programs have gone past adding to your brand equity (unless it’s done fantasticly well). It may have some strategic relevance but it’s more of a tactical tool to encourage repeat custom rather than loyalty, especially if we look at it from the data collection viewpoint.

  • http://www.asifafzal.com Asif

    Number 1 Mehreen because that would put me out of a job and secondly because then competitors with marketing departments would have a distinct competitive advantage, with having a better reinforced brand identity and better brand recall rates.

    I don’t know about anyone else but I could have made some serious cock ups when I was a fresh graduate if I didn’t have an experienced professional showing me the ropes.

    Costs may decrease with your idea but I’m willing to bet over a period of time so do sales.