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Loyalty Schemes are Bust - ShopTalk Rewards Fixes Them

Posted On - 17/02/2017 11:40:57

Are loyalty schemes broken?

Are loyalty schemes broken? It's a fair question. After all, it's pretty obvious being paid for spending has nothing to do with loyalty.

And do you want ‘paying' in some non-redeemable tokens when cash would actually be more like a reward for loyalty?

Add in poor online experiences and inferior customer service it's no wonder research shows social media sentiment about schemes is 90% negative.

‘Valued customer'? Are they taking the….? So what on earth possessed us to launch one?

Transactional loyalty

That word. You read it and just know there's going to be a problem. Mechanical, impersonal, automatic….

Transactional Loyalty schemes reward spending. 97% of schemes use this approach. And research shows 77% of these fail in their first two years – only 44% of members actually use them. Need we say more?

Other types of schemes reward writing reviews, taking part in surveys, downloading apps, saying or doing things on social media or posting you've checked into a store. Do these schemes fare any better?

You're asking the wrong question. The real one is why do businesses resort to bribery? Why are they having to pay you to do these things? This isn't loyalty, you're being paid to do a job. A job you don't want to do willingly. A job you'll only do if enticed.

Can there be a better way?

There can. But you need to come at things in a completely different way. No-one denies the ultimate goal of a loyalty scheme is keep customers and get them spending. But the clue's in the title: it's a loyalty scheme.

Loyalty is about fidelity. About the customer wanting to be faithful, feeling some allegiance, being committed and a sense of devotion to your brand. You can't buy sentiments like these.

Loyalty can't be measured by a bank of unclaimed rewards however big. That's just preying on greed. No, if you're going to create genuine loyalty you have to win hearts-and-minds. And that means a new approach.

Business by referral

Is a book by Ivan Misner – the founder of BNI, the international business networking organisation – and it's probably the best book on referral marketing I know. And no I don't get commission. But what's all this got to do with loyalty?

A huge amount of referral business is done using the principle of reciprocity: you refer me, I refer you. It's a long established, effective and sound practice. Within this some choose to encourage referrals by paying for them. But for others this can cause an issue. It makes them uncomfortable.

You see, if you're being paid to refer are you just doing it for the fee? Or are you doing it because you're making an introduction to the best person you know in their field? There's more. Let's say the person finds out your being paid and asks you the questions. You can't deny: you'd never say you were only doing it for the money. Can you see where this is going?

Can your recommendation be trusted? Who knows? It's a knotty issue for sure – but it's also the one that led us to create a very different kind of loyalty scheme.

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