February 22, 2012

Because I launched the first frequent flyer program more than 30 years ago (1980), I’ve worked with numerous firms over the years in developing loyalty programs. But now rewards may not be the best way to grow customer loyalty.

Today your customer is bombarded with benefits, points and prizes. There are 1.8 billion loyalty-program individual memberships in the U.S., with the average household participating in 14.1 programs. Yet more than half of those memberships are inactive, according to an article in Ad Age by Martin Reidy, president of Meredith Xcelerated Marketing.

While rewards have worked for travel and credit cards, where increased frequency and value make the rewards worthwhile, they have been far less effective for other businesses. Why? As Reidy points out, “A successful loyalty strategy is underpinned by the consumer’s connection with your brand. The goal is to create sustained demand.”

Earning customer loyalty requires understanding the way your product/service meets the needs of your most important and loyal customers, not just giving them points for being on your side. How well do you know your best customer? Do you know what they value in your service/product?  Once you know that, you will know how to create a loyal customer and not a shopper.

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