Do you have a loyalty program or a bribery program?
It’s one thing to recognize and reward a target customer for directing a large share of their wallet your way. It’s another thing to give blanket discounts to just about any random customer who signs up.
The best loyalty programs support a clearly articulated customer growth strategy, and use relevant and differentiated offers and experiences to retain and grow best customers. Let’s face it, customers are only truly loyal to your business when your value proposition meets their needs in a compelling and unique way–not because of a kick-back.
I’m not suggesting that cash-back and gift card promotions should not be part your promotional mix. Creating incentives for trial, to gain more customer insight or using reward points to direct specific behavior can be sensible, high ROI tactics.
But when you have to provide an extra incentive–i.e. bribe–someone to shop with you, you had better hope that you are on a trajectory to establish an on-going, profitable relationship. Signing yourself up to continually pay someone who doesn’t really fit your business model–or who is never going to be profitable–is an exercise in futility. Calling these efforts part of a loyalty program is delusion of the highest order.