7 Examples of the Good, Bad, and Ugly of Customer Loyalty in 2021

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By: Bill Hanifin, CLMP™ |

Posted on February 2, 2021

The best way to learn about customer loyalty is to join many programs, whether you want to or not, and experience the interaction between retailer and customer. With our consumer hat squarely fixed on our noggins, we are constantly noticing details and taking notes on experiences, apps, rewards, and communications that are components of the delivery mechanism for customer loyalty. During the tumultuous, pandemic-infused year of 2020 and early into 2021, we’ve had some interesting experiences. We wanted to share the good, bad, and the ugly of these experiences as it creates a lens through which you can make better decisions about your own program and those you participate in as a consumer. We’ll let you guess which of these seven examples fall into each category. There’s a lot to learn here.  

U-Haul delivers on a touchless rental experience

A web search to find the nearest U-Haul locations where trucks could be rented led to a surprisingly innovative touchless rental experience. We didn’t warm up quickly to downloading their mobile app and creating an account as we were serving a one-time need.

We became intrigued when the app journey took us through selection, rental, payment, and then shared clear instructions enabling us to enjoy a sanitary and seamless rental experience. We had only one human contact in the entire experience and that was to pick up the keys to the vehicle upon rental. When we returned, we checked out via the app and left keys in a drop-box.

Consumers are looking for ways to transact ordinary business with less physical contact and U-Haul surprised us with the best contactless purchase experience of 2020.

Panera takes coffee subscriptions mainstream

The pandemic hit the restaurant industry hard during 2020. Early one morning I was out looking for a cup of coffee and, to my surprise, a Dunkin Donuts we frequented had gone out of business. We turned a corner and spied Panera Bread. I ordered coffee inside the store and after adding a bit of cream, I reached for a coffee sleeve.

Imprinted on the sleeve was an invitation to join their coffee club. I learned that I could enjoy unlimited coffee free for the first 3 months and then $8.99 per month thereafter. I initially rejected the idea of a subscription for coffee but then realized that I didn’t have to give all my business to Panera, just average about one visit per week each month.

Learning about Panera’s subscription program while amid a store visit made the subscription offer seem, almost, mainstream.

Ace Hardware needs to eliminate the Loyalty Asterisk

Ace Hardware has a rewards program and execution in their stores is excellent. There’s not a transaction that goes by without an associate asking if you are a member and inviting you to input your phone number on their payment pin pad. Ace awards 10 points for every dollar spent in the store on qualifying purchases (always worth reading the fine print to see what is excluded) and accumulating 2,500 points earns a $5.00 coupon reward — that’s equivalent to a 2 percent rebate.

Depending on how active you are as a DIY homeowner, it could take up to six months to earn that five-dollar reward. That is not motivating. And I’ve found that rewards don’t accumulate across stores. I just received one reward from a store that I won’t be able to return to before the coupon expires. Bummer.

In my opinion, Ace creates confusion for rewards program members with its monthly mailers. Ace sends direct mail every few months that look identical to the reward mailer. Inside is a $5 coupon which looks like a reward but isn’t. Instead, it is a discount redeemable when spending $25 or more on qualifying items. I tried to use that coupon but was frustrated by the difficulty of understanding the definition of “qualifying item”. In the end, I left the discount unused.

When programs don’t offer the opportunity to earn quickly enough and send communications that aren’t crystal clear or which rely on the Loyalty Asterisk too much, the value of the program can quickly degrade. Ace Hardware needs to sharpen the tools in its loyalty shed.

Flanigan’s makes customer experience its loyalty program

Flanigan’s offers some of the best ribs and burgers in the South Florida area. It serves up this great grub in an atmosphere that screams tropical and beachy. The walls are lined with surfboards and pictures from idyllic big game fishing expeditions. Sports are always on via the TV’s that encircle the dining area. Drink specials are de-rigeur, with locals dropping in regularly to enjoy specials on both food and drink.

An executive at the company confirmed that the atmosphere and quality of food are the key components in their approach drive customer loyalty. Why then does Flanigan’s persist in circulating a “lunch club” via a paper-based punch card system?

Punch card loyalty leaves lacking the most important opportunity for retailers in customer loyalty — the ability to identify their customers. Flanigan’s recently moved its Lunch Club to a mobile app and now customers can collect stamps in the app, solving the problems when punch cards are lost. That’s a step in the right direction, but if a brand is going to lead with experience, its loyalty program should be part of that experience.

Building something more creative than “gather 10 stamps, get 1 free” would enhance the dining experience, not distract from it. Maybe incorporating a loyalty offering into the point-of-sale system and communicating with customers on receipts would create a more relevant guest loyalty experience.

Boston Market inventory control trumps its promotional plan

More brands are using SMS to connect with customers and Boston Market is showing up on our radar more than most. After joining Rotisserie Rewards and opting in for text messages, we’ve received a minimum of one meal promo per week. The cadence of messaging is a hair away from too much, but the offers are significant enough that we haven’t typed STOP yet.

The meal promotions include BOGO offers on full meals and creative specials like offering a half chicken, full side, or dessert for only $3.50. Boston Market is well on their way to driving frequent visits if they could do just one thing — manage their food inventory better.

One of the most compelling observations about customer loyalty in 2021 is that program operations touch on multiple areas of the business and thought needs to be given to delivering the experience and rewards that are promised at the outset. We have twice attempted to redeem one of the mentioned promotions only to arrive at the drive-thru window and be greeted with a message that “we are out of turkey, chicken, everything. Come back in 30 minutes. Or we only have meatloaf and turkey”. We left disappointed each time.

Whether in a corporate or franchise environment, centralized marketing promotions must be communicated in advance to store managers, allowing them to prepare for the hope-for onslaught of customers. Anything less can result in customer disappointment.

Cumberland Farms drains it loyalty tank

Cumberland Farms is a well-known convenience store chain that centers its customer loyalty efforts on fuel discounts. Customers who link their checking accounts to the Smart Pay program are rewarded with $.10/gallon discount. The program is mobile-centric, and the customer experience is modern and friction free. Customers using the mobile app can activate the fuel pump, pay for fuel, scan QR codes for purchases inside the store as well as take advantage of product offers in the store.

The program originally offered customers a free reward (usually a choice of coffee, dispensed soft drink, or CF branded water) after pumping 40 gallons. Over the past eighteen months or so, the threshold to earn this free reward has increased to 60, then 80 gallons. Bleeding out value from a loyalty program is always a sensitive process to manage thus experience always helps. In this case, I can’t say we have noticed disclosure of the changes in email communications from Cumberland Farms. I’m sure the retailer complied with their legal obligations, but if customers aren’t made clearly aware of program rule changes, surprise and delight can become surprise and disaster.

The changes make us wonder why Cumberland Farms continues to raise the bar for rewards. Gallons pumped are down due to the pandemic, but fuel margins are higher than ever for many retailers. Someone with responsibility for the financial model behind Smart Pay must take a stand and make one change, not cut away at program value with multiple adjustments.

REI may be the friendliest place to shop in the entire world

In ending this survey of the good, bad, and ugly of loyalty programs in 2021, we wanted to wrap up on a happy note. REI has a created a memorable brand, partly through its adoption of the coop model. Customers can become Coop members by joining REI’s version of a loyalty program. First, REI selected a loyalty model and messaging that reinforces its brand values. Next, they reinforce the feeling of being a “member”, not just of a loyalty program but more like a large family of people who love the outdoors, in their store locations creating an inclusive, fun, and enjoyable experience.

We visited a newly opened store, this one the southernmost in the United States and were overwhelmed with welcoming statements and assistance from store associates. The best part of the experience was that it didn’t feel scripted. The training at REI must be so effective that associates communicate enthusiasm and desire for service in a natural way. The store associates we encountered had the product knowledge needed and pointed out helped accessories and items that we might have otherwise missed.

At checkout, the first question was “are you a member”. I was already a Coop member, but after the experience we had in the store I would have not missed out on benefits of membership in any event. The perception created by store associates created a confidence that being a part of their family must carry weight. When a loyalty program meshes tightly with the brand sponsor and its store operations, the customer barely notices that there is a program to join. We’ll go back, and it will be as much for the experience as the rewards.