I had two close encounters with loyalty programs in the last few days. The first was at my neighborhood beauty parlour (nowadays called salons). You know the kinds I mean, a ground floor flat in an old building… the glass door, the pink walls, old issues of Femina and either the place or the proprietor called Dolly. It was the first time I had gone there and the lady behind the counter tried to sell me a loyalty program. The deal was – I paid Rs.500 upfront and got 15% off the bill each time I went there subsequently. After I recovered from the shock of a place like that offering a loyalty card, I found myself refusing without even thinking too much about it.
The next day, I walked into a Kaya center near my office. The lady behind the desk there listened to me and made some suggestions. She brought out her loyalty wand after this discussion was over. And I found myself agreeing to shell out ten times what the Dolly (ok, that was not the name, but that is how I remember the place) had demanded.
So what is this all about? Competition, buyer’s market, customers who are constantly seeking something new, a market driven by offers and bargains and sales, service definitions getting more complicated – and I am not talking beauty services alone here. Time was when loyalty was driven by more personal things like – I keep going back to the local kirana store because they give me credit, or the owner knows me from a very long time and makes sure I get the best / freshest / cheapest…
The dimensions have changed now, the stakes are higher, the customer is savvier and saucier. But while companies have been striving to create bigger and grander programs, they seem to have lost sight of the basic needs of the customer. In case of loyalty, bigger is not always better.
So going back to the beauty salon case, what worked for me with Kaya –
- it is certainly a bigger name and the trust existed before I stepped into the place – I did not need convincing. That however does not mean that loyalty works only with big or known names, very often it is built with smaller service providers on the basis of personal relationship and comfort.
- I did not get a sense of being pushed or hustled, the lady let me take my time, and when she sensed my initial hesitation, backed off allowing me to think and first feel their experience before making up my mind.
-I had a clear sense of what I was getting in return and loyalty therefore came willingly.
- most important of all, the deal was relevant to me…
The only reason Dolly was selling a card was to make sure I kept returning, for the sake of pure paisa vasool. And this is a mistake marketers often make. Is the only intention of a loyalty program to make the customer go back? Does frequency equate to loyalty?
What if I am forced to, since I am tied to the product / service through a silly commitment I have made in the form of a plastic card? What about the other, finer, and to me the more important factors such as satisfaction or even delight…? word of mouth recommendation? emotional engagement with the brand or service?
I may fly an airline regularly because I collect points each time I step into the aircraft, but if I am doing it with a grimace, mentally counting the miles to go before my free ticket drops by, am I really a loyal customer of the airlines? Taking the airline example further, am I likely to feel loyal to a company because the owners thunders on the screen welcoming fliers as guests into his own home, just as I am trying to doze off? Or because the airline remembers my frequent flier details, offers me easy upgrades and timely updates, and a hundred other small things that make a difference to me as a grouchy, if frequent flier?
I am especially taken with loyalty programs that expect customers to pay money for enrolling. If the money is nominal, and the idea is to make sure there is a basic level of commitment, then that sounds reasonable. Or on the other extreme, if the brand is big or exciting enough to make people pay to be a part of it – like say, American Express, then that makes sense to me too (though, as Groucho wondered – would I be part of any club that would have me as a member?)
What is startling is the number of loyalty programs that have been designed without any seeming thought to what the customer gets in return for the commitment. Clients sometimes come looking very puzzled, seeking answers to – why are customers dropping out of my fabulous loyalty program? Or worse, why are they not thrilled and tying themselves up in knots to enroll? I do not need market research to answer these questions… Either the customer is not sure of what the program benefits are or what it really gives in return, or the “rewards” are so silly and insignificant that the effort is just not worth it, or the accumulation and redemption process is so complicated that the customer ends with a sense of having been cheated. All of which spell disaster for the marketer.
In recent times, I can only think of Kotak Mahindra’s credit card which has created – or attempted to create – an offering relevant to their customers. They ran the ihatemycard hoarding campaign across cities, supported by the website. The interesting thing is, according to the website, in the first week of the campaign, they had 23000 visitors! Putting that in perspective, 23000 customers of other credit card companies, atleast half of whom are still there for some reward scheme, thinly disguised as a loyalty program.
A loyalty card does not make a loyal customer. I know, going by the amount of worthless plastic I carry around. Companies need to learn to tie in customer loyalty with that more elusive, more significant factor called customer delight. I hate being a naysayer (heh, who am I kidding? I love it), but these are times of recession and your customer is likely to shift to that place which gives him a quicker reward, cheaper deal or simply bigger smile. Dolly, I am sorry but I have better uses for that five hundred rupees.