Loyalty schemes have nothing to do with true loyalty
Whippet’s Steve Stoner explains how loyalty schemes don’t actually generate the one thing marketers expect them to: genuine, consistent customer loyalty.
‘Driving loyalty’, a subject which confuses many a marketer. Discussions inevitably swirl around, name checking schemes from around the globe: Nectar in the UK, Plenti in the US, Flybuys in Australia, and of course, the elephant in the room: Amazon Prime.
The question our clients mostly ask is: “What can we do to drive loyalty?”. What they really mean is: “How can we drive more sales, more often?”. It’s easy to mistake repeat behaviour with loyalty, but they are very different beasts.
Thanks Steve, don’t you think the Qantas Frequent Flyer works quite well in that customers remain loyal and consistently buy more expensive air tickets to keep their status and get points when they could save real money with other cheaper carriers?
A weird kind of loyalty but loyalty nevertheless?
I’d say that in your example customers are motivated by fear of loss of tier status, not through loyalty to the brand. It’s a value equation customers work out before acting – “What’s worth more to me? Points towards my tier status or saving money with another carrier?”. You could argue that most customers are not very good at maths! The Qantas program absolutely drives behaviour, but not necessarily loyalty. If customers were loyal to the brand you wouldn’t need a loyalty program to drive trade.
I’d say that, apart from Apple, loyalty to a brand is a thing of the past, because (a) brands seldom last long any more and (b) many have cultivated corporate impersonality, as with the Bank of New South Wales (‘You can bank on the Wales’) and the Commercial Bank of Australia merging to form the unappealing ‘Westpac’. All the banks changed their century-old names decades ago; Federation Flour, Sydney Flour (‘Sydney Flour is our flour, we use it every day’), and Ampol (‘I’m as Australian as Ampol’) are all gone; and you’re not really surprised if any current brand disappears or is transmogrified following a takeover, as with Arnott’s “cookies”. I am a member of Fly Buys and Woolworths Rewards but I can’t claim to be truly loyal to either of these names, only to some merchants I know of who have given good personal service. They have business names but you could hardly call them brands.