Do Customer Loyalty Programs Work?
Big Lots has launched a loyalty program – The Buzz Club. Make 10 purchases of at least $20 each and receive a discount.
If I’m a regular customer of Big Lots – that’s a nice unexpected bonus. Will it drive me there if I’ve never been a customer? Probably not. To make a commitment to a new retailer of ten visits – that’s asking a lot.
I’m not suggesting it won’t work. I have too many little plastic loyalty cards hanging from my key chain to suggest otherwise. But here’s what caught my eye in the article from DMNews announcing the program:
“The program will allow us to learn more about our core customers’ shopping tendencies and opens up micromarketing capabilities we’ve have never had before,” said Steve Fishman, chief executive of Big Lots.
So they are gathering information from prior shoppers rather than trying to entice new customers. He went on to say “marketing messages going forward will be more aggressive and more completely focused on value and savings.”
So who is the loyalty program for? It sounds like it is more for the company than the customer.
What is the purpose of a loyalty program? For me – as a customer – it can be a major frustration. If I leave a loyalty card for a particular store at home – I often have to go to the customer service desk and have them look the card up. With a common last name like “Brown” it is no small feat to find my loyalty card number. In the interest of time – I have left my grocery cart without purchasing because I shopped based on the loyalty discount but didn’t have the time to wait for them to retrieve my card number.
There are two sides to everything:
As a customer - we receive tailored discount and marketing messages – but is it what makes us a loyal customer? If we are shopping based on discounts, is loyalty really our motivation? Isn’t it finding the best deal in town?
As a company – we can track purchases to create the tailored marketing messages – but does it drive new traffic? And if our loyalty messages are wrapped around the “best deal,” isn’t there always another competitor willing to loose more money just to drive the traffic?
What do you think? Do loyalty programs work or do we really create a loyal customer through the behavior and the relationship our employees have with each customer?
I just signed up for another one, just tonight at Mavis Winkles… Not sure why I do, because they ask for so much info up front, but it is the thought of going there week after week without taking advantage of the “rewards” that seems somewhat wasteful. I don’t usually fill up all the spots in the card or the requirements to get the reward, but somehow it seems like I need to try. Maybe it’s more marketing than reward?!?
So then what does the customer receive? If you don’t sign up and yet are a loyal customer – do you feel cheated out of the rewards so that the company can gain information to offer more targeted marketing?
I love the idea of a customer having an allegence to a business because of how they are treated but if the loyalty is based on price then isn’t the loyalty only good as long as the deals are better than the next guy?
I’m torn.