Can you buy loyalty?
It is ironic that they are called “loyalty cards”. We are talking about those bits of plastic that litter your wallet and allow you to build micro-rewards you can swap for something you don’t really want. They are not new. In 1800 US retailers were giving away copper tokens to customers that could be used against future purchases. 100 years later S&H in the US offered green stamps for the same purpose. Another hundred years and we are happily giving away intelligence on our purchases by swiping plastic cards. And the reality is that they work. We are drawn to the airline or the retailer where we are accumulating these points in the biased belief that we are getting a good deal. In fact, we have stopped shopping around for the best deal.
In B2B markets things are different but the same. Very rarely B2B customers are given a plastic card. More likely they are given a rebate after hitting some level of purchasing target but the effect is the same.
Are these devices creating loyalty? Loyalty has many meanings. It suggests allegiance, faithfulness, fidelity, obedience, adherence, and devotion. It is that last word – devotion – that we have trouble with. Take the loyalty card away and the customer may drift off to some other supplier. If this is the case, then the loyalty card has simply been a cheap bribe to keep the customer on-board.
“So what?” you may be asking. If it works let's do it. The only problem we have with this philosophy is that it could discourage a program that builds genuine loyalty. In fact, the plastic cards may fool companies into thinking that they are doing enough to build loyalty. Two supermarket chains in the UK – Aldi and Lidl - don't have loyalty cards and don't plan to introduce them. And yet, Aldi UK had its busiest month ever last December with sales up 10% over 2017 and Lidl was the fastest-growing supermarket.
Our discussion is not to suggest that loyalty cards are dead or that we should do away with them. Our concern is that they are labelled as devices that create loyalty and sadly, we know that this deludes many managers. True loyalty comes from a brilliant offer that includes more than just the right product at the right price. It comes from an unpretentious connection with customers who feel that their needs are being served better than by any other supplier. Remember, your relationship with your customer is worth more than the product or service you're selling to them. You can buy customers but you can't buy the devotion of their hearts and minds. You have to earn that.