The Benefits of Customer Loyalty is Very Much Alive

The future of loyalty marketing starts with brands being loyal to customers, going beyond rewarding customers for their “loyalty”.

Loyalty marketing has moved to the forefront over the past few years. However, there is still enormous upside in terms of creating meaningful relationships, what we refer to as Relevant Dialogue, between brands and customers.  The most recent data, and our experiences working with clients and as customers, underscore this opportunity.

Consumer expectations continue to be unmet, leading to a bigger question of whether the true benefits of customer loyalty is dying or even dead.  Depending on your brand, it might be too late.  The benefits of customer loyalty for Radio Shack died last century.  Radio Shack used to boast that it had a store within ten minutes of 90% of the US population and a database to match.  Among other flaws, it suffered from lost relevance and an aging, no longer addressable, customer base. 

Even brands where customer loyalty is still alive face epidemics of discounting, which when used en masse effectively kills the benefits of customer loyalty.  When an industry, brand and loyalty leader like Nordstrom capitulates and moves from semi-annual to seven sale periods a year, they become “just like all the other stores”.  At some point, they dilute their brand and along with that, the impact of its customer loyalty strategy.

This lack of differentiation, exacerbated by merchandise commoditization, supports what a legendary retail CEO shared with us last week: namely, that he is not sure there is much, if any, loyalty left.

Yet in spite (and perhaps because) of such evidence, our view is that benefits of customer loyalty is very much alive.  It’s just not for every brand.  There is a large and still widening gulf between leaders and laggards in almost every industry. The leaders, and those brands committed to challenging them, are the ones that give us hope.

The new loyalty leaders pursue strategies that align with the heart of our definition of loyalty marketing:  that loyalty comes from paying attention to customers and acting accordingly.

These principles are reflected in some of the newest programs from favorite brands of ours like Kimpton Hotels & Restaurants and the Pittsburgh Steelers. 

These brands, partners of rDialogue, are flipping the dated loyalty models from the 1980s toward today, where customers are challenged to be loyal to brands and be rewarded in return.  The new loyalty leaders do just the opposite: they demonstrate loyalty to those customers who are, and will be, most deserving.

What brands do you feel are loyal to you?  For me, here are three:

1.     Delta Air Lines, who thanks me for being a Diamond Medallion Million Miler by occasionally picking me up at the jet way in a Porsche, and always offers a great experience in-flight.

2.     Kimpton, who is more than a client, is a friend who welcomes me back, knows it’s my tenth stay at a property, and has a nice Scotch waiting for me when I arrive.

3.     American Express makes sure I remember my Card benefits and offers based on where I am, so that I take advantage of them. 

They make my travel better, remind me of benefits and offers, and genuinely act as though they know I’m a valuable customer.