It's loyalty, but not from the customer's viewpoint

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By: Wise Marketer Staff |

Posted on May 27, 2010

It's loyalty, but not from the customer's viewpoint

A lot has been written about how loyalty programmes benefit not only the customer but also the organisation running the programme and even the larger loyalty eco-system, but the view of loyalty programmes from the customer's side will always be an essential factor, according to Shaju Nair, head of product management for Wipro  Technologies.

Indeed, there are some key points that simply can't be ignored if a loyalty programme operator wants to develop genuinely happy and loyal customers, rather than superficial 'relationships' based on prices, rewards, or service offerings.

The main problem that consumers perceive with loyalty programmes, Nair suggests, can be broadly split into two main categories: first, there's what consumers call 'the fine print' (the bit of the programme that contains all the hidden pitfalls), and of course misplaced consumer trust.

Fixing the 'fine print' A lot goes into the fine print of a Terms & Conditions section of any loyalty programme's membership contract, and this is potentially the area that leads to the most disappointment, frustration, and broken expectations. For example:

  1. Restrictions on redemption A common problem is that, while marketing messages make big claims about the ease of redemption, the average customer finds that there are numerous restrictions, obstacles and delays involved. This results in redemptions that are difficult to achieve and, while airlines are notorious for this, these problems are increasingly appearing in retail loyalty programmes.  
  2. Hidden costs A lot of the hidden customer costs of a loyalty programme will typically surface after at least a year of membership, and the unsuspecting member is usually taken by surprise by charges applied to either their annual membership or redemption of rewards and benefits.

Don't misplace the customer's trust In sharing a lot of their personal information, the customer expects that information to be used wisely and confidentially. But how many customers actually read the fine print on the membership application form? How many will realise before they join that their information will be shared with 'complimentary partners and third parties' unless they specifically write a letter to opt out of the mailing list? How many provide information with the expectation of it being used to  serve them better? The main problems of data misusage are two-fold:

  1. Data abuse It is often observed that the calls a consumer receives from telemarketers are a result of a particular shopping behaviour or preference. This means that the data that they thought would be maintained securely and confidentially has been shared with an external entity, usually without the consumer expressly giving permission (i.e. where the 'opt in' to the programme's marketing list has been assumed). Such unauthorised use of personal data is definitely not something any customer willingly signs up for.  
  2. Lack of personalisation At the same time, many consumers assume that, with all the detailed preferences captured during the loyalty programme sign-up and subsequent usage, the level of personalisation of communications should be quite high. But that is seldom the case, even in today's data-driven marketing age. In fact, almost no communication is truly tailored to each individual customer, which suggests that loyalty programmes are commonly administered by business rules and rather than customer experts.

Loyalty marketing best practices According to Nair, to ensure a successful loyalty programme as well as a happy and loyal customer base, loyalty marketers must consider the following steps:

  1. Make it easy to redeem points or miles, and keep the instructions for doing so simple and easy to understand;  
  2. Ensure that all future costs are explained to the customer before they sign up for the programme;  
  3. Never share your customer information with any third party without express permission;  
  4. Always personalise every communication with the customer. In today's technology-driven environment, this is something that can be done with a relatively small amount of effort, and the benefits far outweigh the costs.

For detailed guidance on loyalty data best practices, see the latest edition of The Loyalty Guide report (

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