Does It Take a Steak to Make Loyalty Work?

April 07, 2010

Does It Take a Steak to Make Loyalty Work?

Loyalty programs generate more controversy than almost any other type of retailer marketing strategy. Some companies swear by them; others are skeptical that these programs do anything more than give away margin. Research by food industry consulting firm, The Hartman Group, found that 74 percent of consumers somewhat or strongly agree that "retailers need new and better ways of rewarding loyal customers." The consultancy has an interesting take on what works and what doesn't with loyalty programs.

See: http://tinyurl.com/yesy4n8

"True loyalty is about making your customer's life better in a meaningful way, however small or large the gesture might be," says Hartman, which adds that the most effective loyalty strategies "surprise and delight" customers.

Examples include airline elite status programs that provide access to preferred security lines, free upgrades, better customer service, and access to private lounges. These encourage more permanent loyalty behaviors, says Hartman.

In the food industry, several best-in-class food retailers each month send their loyal customers a free coupon good for something of significant value, such as 1-lb. of lobster legs, a Ribeye steak, a large bottle of Tide, or a pie.

It's a thought-provoking article. If you aren't doing something with your loyalty program that really differentiates you from your competitors, then you aren't gaining the true financial return on building a loyalty program in the first place.

-- Don Longo