Loyalty Points, What's the Point?

I recently had a discussion with my better half on how “Loyalty Points” are pointless these days. (Please excuse the pun!) I rather have a clutter free wallet than carry my Ikea or local hardware store loyalty card.
Why accumulate points and work for delay gratification when I can get immediate satisfaction with more money in my wallet? I believe this has become more important in our current economic crisis.
Marketers or retailers need to know that loyalty cards are out dated to moment globalization happened. Why?
1) Brand loyalty is to the product not the store you buy from.
2) That being said, I will take a leap to say brand loyalty will soon become, if it has not already happened, a thing of the past. With multiple companies offering products that all good and very much the same. People brand switching is as common these days as salt. If I need a shirt, I don’t really care if its H&M, Mexx or Zara, they are all good and fit me well.
3) This means loyalty points will be useless to you as you will likely shop less and subsequently accumulate less points. In a vicious cycle, trying to upkeep a loyalty program becomes a struggle to even remember to bring the card!
4) Not only that, considering all things equal, there will be someone around the world that will have the same product cheaper than you can sell it. Worst that someone can be easily found on the internet.
So if you want my loyalty, and encourage me to keep coming back for more, give me a discount instead. I might even pay a membership fee if the discount is good enough.
On the flip side, there is one loyalty program I will continue to maintain. That is my Singapore Airlines Krisflyer membership. Why?
1) The delayed gratification or reward (for example, to get yourself upgraded) is worth the struggle for the points.
2) The product and its experience is important to that individual. For some flying budget air is good enough. This is the key, what is important to that individual.
3) The rewards are quite exclusive and not easily obtainable by most people.
Marketers will need to do their homework to see if a loyalty program is right for a brand or product. Just look at Apple, do you think they need a loyalty program?

1 Comment
  • Kevin Lim

    May 5, 2009 at 12:19 am Reply

    When I caught Wolverine over the weekend, my cinema loyalty card gave me free popcorn. I certainly like it, but I’m not going to go to the same cinema all the time because depending on the my preferred showing and location. You made a good point that some loyalty card systems are fundamentally flawed. Like a game, you can’t make it too hard to earn points, otherwise the fun is lost. There’s actually game mechanics behind the point system which I’ve been trying to incorporate into online communities, particularly with classes. Amy Jo Kim is an expert in this field, and learning from her allows us to steer productive user behavior: http://bokardo.com/archives/game-mechanics-for-interaction-design-an-interview-with-amy-jo-kim/ ENJOY!

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