2 thoughts on “Loyalty is an emotion: Learning from Neiman Marcus, Louis Vuitton and Kimpton

  1. Loyalty IS emotional. Building emotional engagement with customers is vital. But for the many brands that will never be Apple or Louis Vuitton, building HABIT is at least equally important. Giving away unnecessary discounts is never a good idea; well-designed loyalty programs can often reduce overall markdowns and deals. There are many tools smart loyalty programs use to drive habitually profitable customer behavior besides discounts. And one observation: the “much-hyped” Sears program is the only bright spot for a troubled brand. And that program has been credited with producing billions in incremental sales. Most consumers will never love Sears or American Airlines. But those brands love the results their loyalty programs deliver.

    1. Howard, thanks for taking the time to comment.

      I think you raise a valid point that building habit is an important step along the loyalty continuum. I also agree that well designed programs can create a currency that more smartly reduces markedowns and deals.

      Having said that, I’m not sure that one can conclude that Sears loyalty program is a bright spot. The one thing we know for sure is that Sears has experienced a reduction in gross margin that they have attributed primarily to the cost of the new program. I realize it may take time to fine tune the effort, but to date it absolutely has been a profit drag–unless you wish to assert that things would have been far worse had they not done it. I’d also love to see the data that supports the notion that the program is responsible for billions in incremental sales. Again, what you have to believe is that their already horrific results would have been billions of $ worse if it were not for this program. Perhaps.

      But if the program did generate billions of incremental sales it also follows that it’s responsible for hundreds of millions of dollars in incremental cash flow. I think they could have put some of that money to better use. Regardless, and sadly, I think it’s becoming more and more clear that all of this is quickly becoming moot.

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