27
May

There is a boom with Loyalty Cards. Every well-known company, specially those dealing with CRM programs and services, feel they must have them. However, their efficiency has to be questioned and thus this blog.

Let me start this with two questions:

1. How many loyalty or membership cards do you have?
2. How many of them do you use?

Loyalty Card Collage Small.jpg
I have not done a formal research on it, but I can bet that you do not use more than 20% of them!

In my particular case these are the ones I can remember that I have:

1. Airlines cards from Iberia + Spanair + KLM + Lanchile
2. Supermarket cards from Auchan + Carrefour
3. Department store cards from El Corte + Decathlon + Wal Mart + VIPS
4. Clothing store cards from Milano + Cortefiel + Springfield
5. Gas station cars from Cepsa and Repsol
6. Other cards from Hotels, Universities, NGOs, etc.

And I am sure that I am missing many! The number speaks for itself.

Interesting thing is that all these companies spend a lot of money in them. However, the results are really discussable in terms of the loyalty they are really generating. Because not only there is a problem of massification and non-use, but also a question of opportunism. I.e., in many occasions the customer will purchase and keep its normal consumption, no matter what you give to them with the cards. So if you give them an extra discount or points to be exchanged ,great for the customer….. but he will not change his behaviour (no change in the baseline as theorists would say).

customer loyalty 2.jpg

My suggestion is that you therefore think carefully how you manage your loyalty cards. Be sure that:

1. They are appreciated and used by the customer
2. They help you to develop and make loyal your customer base!

Comments and additional perspectives are welcome.

Best.

Ignacio Gafo

Comments

Carlos Yéboles May 28, 2007 - 11:57 am

I moslty agree with your point of view in this topic.

The success of a mass loyalty program depends, by my point of view, on distribution (number of Points of Sail and proximity to the customer), in a good relation product prize with competitors (in general terms) and atractive loyalty program (discounts, information, special events… just for “special customers”.

I always have in my wallet 2 or 3 loyalty cards but it’s impossible to wear all the cards. There is a big problem with fisical cards. We could do much more than what we are doing. One idea is to let the different loyalty programs make a search for ID instead of making it for card number. Others companies let you tell them your card number (I have in my Pocket PC). We shuold work on it.

At the same time we can also consider that prize to win a cutomer is five time less than to retain so, in terms of eficiency, it doesn’t matter lose money to try to retain some customers. It cuold be a second oportunity to retain an unhappy customer or, maybe, to obtain a higher share of customer.

Obviously, the end horizon is to build a data base and know in deep your customer.

Nowedays, in Alsa, we are launching a new loyalty car: Bus Plus. The target is have a 40.000 customers in the loyalty program only in one month.

Good morining

Jigafo May 31, 2007 - 7:22 pm

Hi Carlos.

You are raising many point and I mostly agree.

Main ones I would like to emphasize:

1. These actions pay off in most cases.
2. One key thing for running a Loyalty Program properly is to have a good Database with which you can operate.
3. Prizes should be attractice to the customer. Take for instance the loyalty cards from airlines. They work very well because the clients can see a clear benefit.
4. Segmentation is a must. Segment your clients based on value and give prizes according to it.
5. Last but not least you have the electronic-ID. This topic is worth of having its own blog! It is coming and will be a reality soon. It will destroy the physical cards we have right now.

Best.

Ignacio

hemant jain July 19, 2008 - 9:25 am

The key to how practical and useful a loyalty card is directly linked to the quantum of benefits that accrue in points.I have noticed that airlines,hotles in general are generous with their rewards, and hence these programmes are popular. In contrast the rewards offered by supermarkets or gas companies are so small that the effort involved in using and claiming these miniscule rewards far exceeds the benefit.

Minoti Jain August 1, 2008 - 12:53 pm

Being a manufacturer of Loyalty cards in India and having been associated with several loyalty programmes in the country I can say that with a fair degree of certainty.
- firms are stingy with benefits
-most companies do not want benefits to be realised
- the number of people who actually gain from their points is a very small fraction of the card base.
- hotels,airlines are the most comitted to their programmes and actually offer decent benefits that make it worth the while to the user
-Smaller companies lack the seriousness and resources that are needed for a good programme.

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Thank you very much for this information.I like This site! Thanks!

Hemant Jain October 22, 2009 - 10:30 am

Very few loyalty schemes give out finite usable benefits. In most cases if you observe statistics points more than often lapse for one reason or another.
try booking a ticket on the dates you want using airline miles and there is no way you will have success.
Also there is a big element of sheer lethargy. few people actually make the effort to diligently enchas their benefits before they lapse.
The newest trick of the trade is that whenever there are special promotions offering enhanced points you need to register for that promotion or you will not be able to avail of the special scheme.
As a manufacturer of loyalty cards having two decades of dealing with numerous loyalty programmes the only ones that really give tanglible rewards are the hotels.
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Jay Mackay February 14, 2011 - 7:47 pm

Carlos, I read your article on loyalty cards and all the comments above with interest. I have actually written a blog of my own which says “You know that Customer Loyalty Programs are becomming popular when your wallet is bulging with cards and your key ring has no space for keys”. Yes I agree with you that a good concept is being kind of wasted. On the other hand, I recently found a perfect loyalty program and have become a Marketing Consultant for the same. It will take a long page to describe the program here. All of you can visit my website and check it out for yourself.and/or contact me for more information – http://www.rewardyourself.name

Love to hear your comments on my website and the loyalty program I respresent.

free picks July 21, 2011 - 9:26 am

Great post! but only use things that give points rather than credit.

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