The Good, the Bad and the Ugly in the Golden Age of Loyalty

Oct 30, 2012

From “In this world there’s two kinds of people, my friend: Those with loaded guns and those who dig. You dig,” to Dirty Harry’s, “Go ahead, make my day,” Clint Eastwood’s quotes are without fail.357-Magnum-Smith-and-Wesson blunt. After watching too much Clint this weekend, I let this trite little doozy fly on Monday:

“You see, in this world there’s two kinds of loyal customers: Those engaged. And those enraged. You dig?”

Like The Good, the Bad and the Ugly, (that quote was def “the Ugly”) the stakes are pretty high and nearly as black and white as those with loaded guns and those “who dig” when it comes to meting out loyalty and where loyalty spirals down dusty roads. So here’s the good, the bad and the ugly of what I am seeing in loyalty today.

The Good

The Golden Age of Loyalty has arrived! Don’t believe me? Just ask your friends how many loyalty programs they’re members of. Or, check out the data from the 2011 COLLOQUY Loyalty Census, which state that US loyalty program membership stands at 2.1 billion, up from 1.8 billion in 2009. That means that in 2011, the average household has signed up for no less than 18.4 programs. What’s more, a recent Flurry report finds that smartphones – increasingly the workhorse devices for giving consumers the on-the-go loyalty program status and use flexibility they crave – are one of history’s fastest adopted technologies. Amazingly, their adoptions rates are growing some 10 times faster than PC adoption of the 1980s, twice the speed of Internet adoption in the 1990s and triple the speed of social network’s embrace in the 2000s and beyond. Astonishing, isn’t it?

The Bad

The Golden Age of Loyalty is also about mitigating the Golden Age of “Redemption Resistance.” Just because marketers have an unprecedented ability to reach their consumers like never before, and if they’re smart, begin adopting an omnichannel approach to loyalty, doesn’t mean consumers want the bombardment. Repeatedly I’ve driven home the disconcerting fact that loyalty program members make up only 35% of a company’s total customer base, and of that 35%, just under one-third redeems their rewards. Not only is total loyalty membership relatively low, its perceived value is also weak. In 2011, 21% of survey respondents agreed with the statement that “Most loyalty programs don’t offer any real value,” up from 15% in 2008. And returning to Colloquy data, of those 18.4 loyalty programs per household, only in 8.4 of them do people actually participate.

The Ugly

The ugly truth is that in terms of loyalty, elements of the good and the bad are playing out simultaneously. But I wouldn’t have referenced the “Golden Age” of anything in this blog if I didn’t think the good outweighed the bad. Now more than ever, loyalty programs should be about the experience they offer, combined with the consumer freedom to earn and burn rewards as they see fit. And all of that accessibility should be as smartphone-ready and ease-of-use compliant as first-generation plastic loyalty cards. Social media needs to join the conversation as well, as marketers strive for extra care when it comes to sending the right message for the right consumer at the right time and, of course, through the right channel. BJ’s Restaurant and Brewhouse and its loyalty program, Premier Rewards, is a great example of a dining establishment making certain that loyalty’s Golden Age doesn’t tarnish. BJ’s program combines a wealth of social media access and the ability for members to earn rewards points just for signing in and tweeting or Facebook posting their presence at a BJ’s restaurant.

Apple is also a leader in the Golden Age of loyalty. The computer company recently improved its One-to-One membership program where for $99 after purchasing a Mac, users could sign up for a limitless amount of face-to-face classes on to can get the most out of their laptops. The revamped program, available to customers for one year after purchase, increases the number of sessions available and provides more flexibility for either individual or group work. The goal of the loyalty program is to instill an emotional connection to the product at hand, (by learning more about it) and then similarly connecting with Apple staff in such a way that empowers users and inspires their repeat purchases, ideally at higher price points.

It comes down to one of mine and Kobie’s favorite quotes by Walt Disney and featured in our recent Technology webinar, “Do what you do so well, that they will want to experience it again, and bring their friends.”

Apple does. And so does BJ’s.

I’m no Dirty Harry but considering the good, bad and ugly about today’s Golden Age of loyalty, I’d say we should all ask ourselves one question: Do we feel lucky? Considering the promise, I’d say, “it makes my day…”