• by Seana Mulcahy , March 27, 2006

Most loyalty programs suck. Don't gasp, they do. The bulk of them don't make people loyal. Well, few have been good. Take Subway's Sub Club cards. Patrons were given a free sub after purchasing eight sandwiches. Sure, it worked well for Subway--so well, the company got rid of the program.

The April issue of the Harvard Business Review states, "It is now well recognized that an old customer retained is worth more than a new customer won." Do you agree? Putting my consumer hat on, I think about sites I used to go to in order to buy products online. I never really go to many anymore. I don't think it's because of an influx of new sites or anything. The sites are still well-designed, with strong privacy policies, clear methods to unsubscribe, secure ways to pay, easy checkouts... the list goes on. Then why haven't I gone back? Perhaps I haven't had a good gentle reminder in a while. I want things like free shipping or gift wrapping. I still get lured in by products associated with my past buying behavior. Or better yet, special sales for frequent buyers.

Now back to the magazine article I just read. In a nutshell, it says loyalty programs do not make customers loyal. Rather, "loyalty" means faithfulness. Don't you agree?

Let's consider a worst case scenario. This just happened to me. I had a Motorola V3 RZR phone begin buzzing like a pack of mosquitoes, then lose any graphics on the flip. Silly me, I thought it would be easy to call the good ole mobile phone company and get a replacement phone. After all, I'd switched to this particular provider about a year ago, signed a contract porting my number (from another carrier) over, and bought the phone when there was a waiting list for them. After several hours speaking to customer service rep after customer service rep, they finally told me they'd send a replacement free of charge. Oh gee, thanks.

Long story short, my bill came in with an added processing free and, guess what? I was locked into another two-year contract! Guess I didn't read the super-fine six-point font online. Way to reward the loyal. Now the company sends me all sorts of clever e-mail updates with highlights and teasers of new phones to come. Why should I pay the street price for a brand-new model when I got serviced this way? The worst part is, most mobile phone carriers are like this. Once they have you, you're pretty much screwed.

In the brick-and-mortar world, I have a loyalty card on my keychain for a local supermarket. Since it's in the burbs, there is a smattering of competing markets. They all had these cards. I think in several years I have gotten hard copy mailings with promotional coupons for loyal customers. It was centered around my typical spend. The promotion was to come in within a given week and save $10 when I spent my typical amount. Very cool. It worked; I was faithful and shopped within that week. It also wasn't hard, as I shop every week.

However, this particular supermarket knows a whole heck of a lot about me: what I buy weekly; my credit card(s) and debit card information, my home address, my phone number and my e-mail address. I forget filling out the paperwork when I got the card. One thing they didn't ask is for my e-mail address. Duh.

I had a supermarket chain as an account. Certainly most of these folks live in an offline world. When we presented focus group studies and ethnographics, their heads spun. Their core target audience was a bit younger than they had thought. These women were even more pressed for time. Most had loyalty cards and complained about them. They thought the offers were mainly coupons for products they wouldn't really buy. They also said they went online all the time. They looked up health and wellness info, coupons, recipes, meal planning, party planning... the list goes on.

As you can see, this particular client missed the mark by failing to communicate with its core target audience in a vehicle that it frequented. The supermarket was stuck in an old offline world. No matter how we positioned or recommended e-mail programs and online incentives, they balked.

I could go on and on about missed opportunities, crappy loyalty programs and ways to incentivize the "faithful." However, I want to hear from you, dear readers. Have you seen loyalty programs that just plain old suck? Better yet, have you seen any that work? Are they offline or online? Post to the Spin Board and let's figure this out.