Some marketers regard incentive programs as extending a thank-you gesture to keep customers coming back. Experts in business psychology liken the practice to bribery. Real loyalty can be spoiled by bribes. There is a better, more profitable route to true customer loyalty.
Phrases such as points program, loyalty rewards, frequent buyer, and loyal customer are often used in similar contexts. The central idea is that a company that rewards consumers for making repeat purchases can secure steady business from them over time. While this may be true, real loyalty is seldom involved.
Some marketers describe incentive programs as extending a thank-you gesture to keep customers coming back. Experts in business psychology liken the practice to bribery. They point out that repeat purchasing is not the same as true loyalty. Indeed, loyalty does not depend on discounts or give-aways. Real loyalty can be spoiled by bribes.
Customer loyalty is a matter of business relationship management. In contrast to points programs and pay-your-bill-to-enter lotteries, there is a higher road to true loyalty. It is more profitable and requires a different view of the business relationship.
Many retailers use club membership cards with give-aways and points programs as buyer incentives. As intended, these generally do secure repeat business and keep customers from leaving for competitors. However, the benefits to these companies come at a considerable cost. Close study of card-based loyalty programs reveals the main advantage: consumer data from tracking customer purchases.
For example, when a grocery-chain customer has his or her card swiped at the till, a computer links the products purchased to his or her name. This contributes to consumer statistics involving the information that the customer provided in applying for the card. Thus, the give-aways and discounts associated with shopper's club cards are a cost that grocery chains sustain to gain consumer information for targeted marketing campaigns as well as repeat customers.
Though retailers and their suppliers naturally seek more and better consumer statistics to sell more products to more customers, and to keep them coming back, true customer loyalty is left out of the equation. Indeed, loyalty and rewards do not belong together in the context of reasons why customers buy.
The dominant view equates loyalty with repeat purchasing:
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