The question arose one evening while I was speaking with an RV resort owner. I said, “Bill, do you evaluate your customer base and if so, do you give any special consideration to your loyal customers?” What he said had me quite perplexed. He said, “No”. Bill went on to explain that his view of customer treatment mirrors that of the golden rule. “Treat others how you would like to be treated,” he said. “Everyone deserves respect and appreciation for having chosen to do business with me.”
This is the oldest rule in the book, so why was it such a revelation to me at that moment? Perhaps it’s because customer loyalty articles are ubiquitous in the various marketing circles I frequent. I see daily content barrages about all the costs associated with getting new customers versus how inexpensive it is to keep loyal customers. Look for yourself. You’ll find endless streams of digital diatribes referring to loyalty programs and why to use some but not others.
My question is why wouldn’t someone be loyal? For example, I don’t go to Dunkin Donuts to get my coffee because of their loyalty program. I go because they provide a consistently satisfying coffee with fast and prompt service. It provides the value in flavor, warmth and caffeine I need to have each morning.
I’m not saying that it hurts having a loyalty program or even taking special care of your regular customers. In fact, these programs can be very helpful with mitigating potential losses within your loyal customer base. Especially if the consistency of your service lapsed and resulted in a bad experience for that customer. Loyalty programs in my opinion should operate as a safeguard against losses but should not be promoted as the reason to consume that product or service. The reason someone should be loyal to you, needs to be because your product or service adds to the quality of that customer’s life.
Sometimes, I find loyalty programs getting in the way when I need a job done. Here in Florida we have two major grocery chains. We have Winn Dixie and Publix. Winn Dixie has a loyalty card that gives you money off gas for every dollar that you spend at their store. It will also give you additional money off their in-store specials. Winn Dixie is also closer to my home, and believe you me, I have a loyalty card with them. Sounds like a good deal, right?
Well, I prefer Publix.
Let me start off by saying, I do not belong to a Publix loyalty program, I do not save money on gas when I buy something. I go there because the produce is fresher, discounts are given to everyone not just card holders, the isles are wider, the floors are cleaner, the lighting is brilliant, the registers are always open and the people are friendlier. Of all these key differentiators, the best part for me is the universal discounts.
When I go to Winn Dixie, I cannot get their discounts unless I remember to show my card or give my phone number to the cashier. It’s sort of a hassle at check out while I’m deciding which card to pay with. Not to mention the terrible process when I try to redeem the rewards. I must go to a Shell gas station only, put in my Winn Dixie Card first, then put in my credit card, and the discount only applies if I have logged enough money with Winn Dixie and it’s only good for up to 20 gallons. That’s a lot of extra steps to receive a reward.
I feel drained from all the frustrations I encounter trying to do business with Winn Dixie. I would be far happier, if they dropped the free gas and gave me fresher lettuce, put in some higher wattage bulbs and didn’t leave me sitting for hours on end in a line of people who can’t find their reward card.
In the fitness industry, you have similar comparisons. I held two memberships at two separate clubs. LA Fitness and Planet Fitness. LA Fitness has a family loyalty program. Each family member that signs up, in addition to the full price member, gets a percentage off their membership. It is still a sizable fee when compared to others in the industry.
Planet Fitness, on the other hand, has a substantially lower monthly cost, and immediately upon signing, you receive discounts from their consortium of local and publicly traded businesses. The moment I signed up, I went to my favorite restaurant that participates in this program, showed my Planet Fitness keychain, POOF, twenty percent off my meal. This wasn’t presented as a loyalty program but a benefit as a member and immediately available upon doing business with them.
I cancelled LA Fitness shortly after enjoying the benefits of Planet Fitness.
Ok Brian, wouldn’t you define a loyalty program as a benefit? Simple answer. No. I believe a loyalty program is a reward that’s only value is to those who follow a specific set of rules set forth by the company that still has a vested interested in managing costs. Benefits are a set of items that provide additional value and are extended immediately. They are intended to remove barriers, making it easy for the customer to mentally justify the expense through the value they received.
Benefits can be manifested in a variety of ways. One benefit of doing business is how easy you make it for people to do business with you. These types of benefits include features like accommodating staff members, friendly policies, intuitive ways to create reservations or accepting payments. Another benefit could be the quality of the presentation of the park, the quality of the amenities and even the accommodation itself.
Loyalty should be incentivized by the commitment to quality, consistency of good service, the outward display of appreciation for your guests and the personalization of your communications with them. Lacking in any of these areas leaves you vulnerable even if you have a loyalty program.
I am of the kind that prefers benefits versus rewards. I would say, however, that choosing benefits is a far more challenging road than a rewards program, but it does provide larger returns. It takes an upfront investment of time and money. In our business, we’ve had to invest quite a bit of capital to increase the value of our services. Funds had to be earmarked for technology upgrading, talent acquisition, companywide training programs and better materials. The time investment included learning more about our customer, training on how to incorporate best practices and create a strategic plan on how to provide more value for every customer that chooses to work with us.
In the end, our loyalty will derive from our continual effort to treat our customers like gold, the way we want to be treated.