Six Pixels of Separation - The Blog
June 14, 2012 3:14 PM

Earning Loyalty Points

This will not be about how to game a system so that you can redeem a free flight. Sorry.

When most people think of earning loyalty points, they think of their loyalty cards. They think of spending money that is then accrued into a virtual account where the dollar amounts are assigned some strange point structure, and if they spend a lot of money, they can save up those points and redeem them for a free flight (or other goods and services). People complain all of the time that this point accumulation is useless because the flights that they would really like to take are never available. The brands behind these loyalty programs are capturing tons of valuable data in what is perceived as a fair trade.

What if we looked earning loyalty points differently?

What if loyalty was less about how much a consumer buys, but the bigger win is that the brand earns loyalty points for doing the right thing for the consumer? How do you think a program like that might work out in the end? Yesterday, I had the pleasure of attending the Canadian Marketing Association's Social Media conference in Toronto. The morning keynote session was Martha Rogers (from Peppers & Rogers Group) talking about her new book with co-author, Don Peppers, titled, Extreme Trust - Honesty As A Competitive Advantage (Peppers talked about the book in this podcast with me back in May of last year: SPOS #253 - Don Peppers Looks At The Future Of Marketing). I found her presentation extremely frustrating. It's nothing that Rogers said or did (she is a fantastic presenter with amazing content), it's that the net result of her presentation is this: why don't brands act in the consumer's interest?

Why don't brands act in the consumer's interest?

It bears repeating, doesn't it? Intuitively, we know that brands that build true trust and credibility are the brands who spend each and every waking moment ensuring that they are removing all of the friction that comes from their buying (and post-purchase) experience. The paradox (and the part that really frustrated me about Rogers' presentation) is that the brands who do this well are few and far between (go ahead, start building your own list and you'll see how quickly you run out of steam). And, it's not like the brands that get this right are not profitable (see: Apple). And, it's not like the brands that get this right don't often make mistakes but are still perceived to be great (see: USAA). And, it's not like the brands that get this right are small or medium or big... size has nothing to do with it.

We are trapped in dogma.

That was the truly depressing part about it. Rogers asked the audience how complicated it is for iTunes or Kindle to let you know that you're buying a book or a song that you already have, so you don't pay for it twice? It's not that difficult (and they do it smashingly well), but most brands won't do this. Rogers asked the audience why mobile companies don't call their customers up to help them change their plan, so that they can save more money? Think about that one: would you switch to another provider if your mobile company did that because they actually cared? The thing about dogma in marketing is that we're running everything day to day and week to week. We need the sale today to make our numbers tomorrow, with very little optics and care towards the true endgame: long-term loyalty and customer lifetime opportunities.

Buying loyalty.

My big takeaway is this: the mass majority of brands are trying to buy loyalty (and this can be as small as asking someone to like them on Facebook to as major as getting a customer to sign up for a corporately-owned credit card because of the promotional goodies that come along with it), but loyalty (true loyalty) can't be bought. It's something that brands earn - each and every day - and it's reflected in everything from how they promote their wares to how they communicate with consumers through channels like Twitter, YouTube and Facebook. Brands have every good intention to be great, but the general attitude is about being great today - in the moment - instead of being great over the entire customer experience.It's too bad that brands treat loyalty like a points game and not like the ultimate goal towards a truly great consumer experience.

What the world needs now is more brands that act in the consumer's interest.

By Mitch Joel


Comments Comments Feed
  • Posted by Spike Jones
    Mitch Joel

    Great post. And great way to look at it. I like to take the same view, but with fans. Flip the concept on its head: Brands need to become fans of their fans. How cool would that be?

    Just food for thought.

    Reply
    • Spike - I love your flip. Brands need to become fans of their customers. My father would have approved.
      He owned a bookshop and used to wipe the shelves - so that the customers wouldn't get dust on their fingers as they took a book off the shelf.

      Pay fans for giving attention to your ads - that's the new idea I came across recently.

      More of the same movement...
      (This is my first time reading you.)

      Reply
  • Posted by AC
    AC

    I think it's a stretch to say that Apple has its customers' best interest at heart. They are a notoriously opaque company with customer service that is lackluster at best, and offer unconfigurable and unrepairable products.

    The only one I can think of off-hand is Raspberry Pi, and they're almost more of a charity collective than a corporation.

    Maybe I'm just too cynical.

    Reply
  • Spot on - what the world needs now is what the world doesn't have. I tried to compile my list of brands that do what I want... I got writer's block.

    There is a problem with "loyalty" - and another with "legacy". Too many people go to work without an eye on their legacy.

    A brand is a legacy - it's what you'll hand over or leave behind. Most people haven't even asked themselves "what do I want said about me after I'm gone?"

    Employees don't care - they want their salaries so that they can do what they really care about.

    CEOs are driven to survive, to maintain their egos, to cling on to power... they have no time for being great for the brand.

    The consumer cares. Consumers tear their hair out. But they have no one to talk to who cares except other consumers.

    But everyone says they care... Everyone says they have the highest values...

    To few know how to hold complex matters in their mind, heart & actions. It's too much for most. So they take short-cuts & hope they get away with it for long enough to accumulate security.

    How many business leaders are authentically passionate about the cause of making a better world?

    When you find one who cares more about the consumer's interest than themselves - photograph that person & frame it. You won't collect many.

    Reply
  • Posted by Michel Bertrand
    Mitch Joel

    I agree that the brands should show loyalty to its customers, instead of the other way around.

    The big problem with communications companies in your example is that, in Canada at least, they are very much a monopoly, so they can't be made to care, as they have no competition.

    But some companies do it right as you say, and these we remember for a long long time. For example, in February I tore my Achilles tendon, and needed crutches for what was expected to be a long time (about 3 months). After the first week I was already developing pains from the regular old crutches that I initially used, so I started looking for a better and more ergonomic alternative on the net. I found a company called Mobilegs and sent an email to get more information about their crutches and shipping, etc... Not only did they ship the crutches *fast* when I bought them, but they offered a nice discount right up front, *before* I was even a customer, and were always quick about answering questions after that. When calling them on the phone, they would actually ask me how I was doing because they knew that if I needed their product, it was because I was in a bad situation.

    And on their Facebook page they link to articles about recovery from different kind of injuries instead of tweeting their own horn all the time.

    Even though I may never (I hope!) need their crutches again, you can bet that they will always be first on my list of recommendations to my clumsy or accident-prone friends :)

    Wasn't this just called "customer *service*" in the old days?...

    Reply
  • Posted by James M. Manson
    Mitch Joel

    While I don’t necessarily agree that a system where brands have to earn loyalty points would work, I do realize that as the economy gets increasingly more global, brands will have to work harder than ever to earn the devotion of consumers.

    I think current loyalty systems do need to be re-thought from the ground up. For the programs I work on, it is usually a core objective for program owners to reduce point’s liability (i.e. get users to spend their points). Unfortunately this sort of objective is a double edge sword. Users that burn points experience a short momentary surge in “loyalty”, then loyalty rapidly drops off after the initial points redemption; the thinking is that it could be many months (or years) until the user has enough points to make another purchase. Individuals are most likely to divorce a brand shortly after a large points redemption.

    Giving credit where credit is due, many large loyalty programs are making efforts to improve the flexibility/options users have for points redemption (TDRewards is a great example). Some companies are also trying to create more community around their points programs, offering special services, benefits, and pricing to their subscribers (i.e. taking a slightly more long term approach to keeping customers loyal)

    I’m curious, if you could change one or two things about the loyalty programs you use, what would it be?


    Reply
  • Posted by Del Chatterson
    Mitch Joel

    Well said Mitch, and I would even generalize that the essential mission for every business is to build long-term, loyal, profitable, customer relationships. Everything flows from there.

    Reply
  • Thanks to you and your books and people like Seth Godin, Douglas Rushkoff, and Chris Brogan, we have access to brilliant minds and what you guys are thinking. This access allows us to fuel our thirst for brilliance. We know what we want and know what we are capable of getting and will not settle for anything less. This is a great thing about accessibility. No excuse for mediocrity. We will not stand for it. You want our business do your research and earn it. The Telecom industry never had to earn anything. The concept was simple we own the lines and built the infrastructure now you have to pay us to use it. Unfortunately after they made their money back it was easy to take. They did not have to satisfy customers. We had no choice. But do we really? Skype was my direction and I'm sure many were heading that way until MS bought them. The CRTC must be dismantled and created from the people for the people. We have learned that choice is a right that we all deserve.

    The other point you touch on is the outcome of capitalism. What is the goal of our society? Why do we work? Why do we accept this model where we can never make ends meet? They (government prints money) with no accountability (meaning no gold to back it up.) We borrow more and buy more than we can afford and when we lose our job or can’t work we hit the debt wall. Have we reached our end with this outdated ideal and creating an indebtedness society? Look what already happened in the Arab Spring. Now Greece and Spain! What country is next in Europe? This affects all of humanity. Instead of focusing on the free things like love and family we have chosen to place complete emphasis on fake ideals known as money. We kill over it and kill the environment which is part of us to gain access to it. Why? Maybe we have not had the courage to change the game. To stand up and say we need change now. Let’s wake up and stand strong for the future of life on our planet. Don’t you think that this is worth fighting and living for? The rest of all this crap….does it really matter the type of car you drive? House you live in? Let’s focus on what really matters…..HUMANITY 200,000 years old and counting.

    Reply
  • Posted by Chris Stephens
    Mitch Joel

    Can you imagine how amazing it would be if big banks started thinking this way. It could do wonders for the industry as a whole, considering they spend so much time in the limelight after the financial crisis and executive pay.

    Reply
  • Posted by Luis London
    Mitch Joel

    I guess I am going to send this to a couple of big companies. Truth is, not every company thinks about their customers.

    Reply
  • Posted by web page
    Mitch Joel

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    Reply
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    Mitch Joel

    The setup costs made up of the workload and software, and the pertaining license is low.
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  • Posted by shaz
    Mitch Joel

    The idea of brands need to become fans is impressive and useful in practical life. My opinions are much similar to your post. I love your concepts and logic's that you provided in your post.

    Reply
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