“Are you a member with us?”
No, why?
“Well if you join now, you’ll accumulate points and you can get store credit.”
What do I have to do?
“I just need some details…”
The buy ten, get one free offer…
Or a membership card to get the discount…
In theory, we can be swayed by loyalty campaigns. It makes sense that if we had an offer from a particular place, we’d prefer to go back there.
However, when we play out the full cycle of loyalty programs and humanise the situation, we find a problem. Let’s have a look at the loyalty campaign life-cycle:
- Organisation tries to buy loyalty with discount
- Competitor matches the discount
- The margin is squeezed for the organisation, so high level service is comprimised
- Service is key, so users migrate to the competitor
- The organisation tries to buy loyalty with a new discount…
And so we go around and around.*
At the end of the day, for most of us, when we think about our favourite cafe, restaurant or gym, we aren’t going there for the discount. We go because of how we feel through the experience.
We go to be acknowledged and we go to be transformed.
*Furthermore, if there is any sort of card or “buy-in” to the loyalty program initially, this can create up-front friction for the new user.
**Hat tip to Marty Neumeier and his book “Zag” which introduced me to this concept some time ago.
