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Most households hold approximately 14 loyalty cards from various stores. But most of those households keep only 6 of the cards active. In the face of the reams of loyalty card offers, customers feel overwhelmed, especially when they receive offers that seem totally uninteresting. Loyalty card preferences also differ by customer—some want cards that improve the customer service they receive, others prefer free items if they purchase a preset amount, and still others enjoy accumulating points to receive a reward. Yet all loyalty programs aim at building customer relationships. So why don’t loyalty cards capture consumer loyalty?

A key reason may be people’s basic preference for instant gratification. Especially among the 80 million consumers in the 12–31 year age bracket, waiting for their rewards makes no sense. Such customers instead exhibit loyalty toward retailers that their friends or family like or that seem cool, according to word of mouth.  Loyalty programs need to become far more simple and streamlined so that customers enjoy the benefits that they receive, as opposed to receiving irrelevant offers or waiting an eternity to finally get something free.

That is, successful loyalty programs are those that appear relevant to customers, likely through personalization. If a loyalty card offers a cup of soup after the customer purchases 10 sandwiches, it fails; this customer may not even like soup. Instead, if retailers can learn more about their customers, they can offer a personalized reward program that induces a deeper bond between the customer and the company.

Discussion Questions:

  1. What are some of the main problems with most customer rewards programs?
  2. Where are the biggest opportunities for loyalty programs?
  3. What type of program or incentives would make you loyal to a particular retailer?

Al McClain, “The Loyalty Card Conundrum,” Retail Wire, June 8, 2009.