The difference between loyalty and bribery

Customer loyalty is a huge buzzword and a critical focus for most businesses.  Loyal customers are the holy grail for most businesses. However, most brand and customer loyalty programs totally miss the mark.

A key focus of many programs is rewarding customers for points spent on purchases.  However, when you use this as the cornerstone of your loyalty program, your customers become fans of your program instead of your brand.  This more closely resembles bribery and while bribery can be highly effective in the short term, it almost never works over the long-term.  If and when another competitor offers more points per purchase, then you are at risk of losing your customers.  This is the loyalty equivalent of competing on price (oy!).

Moreover, the traditional reward-for-purchases system also ignores influencers who perhaps don’t spend as much with you directly, but may indirectly be responsible for a significant portion of sales through their evangelism.  Making these influencers second class citizens of your loyalty efforts is a gigantic mistake that is made by even the largest publicly traded companies and multi-national brands.

My firm (Intercap Merchant Partners) has been developing and monetizing enthusiasts/raving fans and influencers for brands for half a decade- and what we have found is that in today’s busy world, this goes beyond just a rewards system.  To create brand advocates and deepen relationships, it often involves creating a bridge between a company’s products/services and their customers through focusing on the customers’ lifestyle needs.  In some cases, this involves bringing in content, products and partnerships that are outside of what you are directly selling. 

Social media is focused on dialogues, but for those to be most impactful to businesses, those dialogues need to translate into revenue, profit and real evangelism.  This means both paying attention to the ongoing conversations of your customers and creating methods to make your brand relevant and important to your customers’ lives.

So, the next time that you offer a customer one point per dollar spent, ask yourself if you are really generating loyalty to your company?