Look Both Ways Before Launching a Loyalty Program

Almost every major brand in the country has a loyalty program. But for a hundred years, the road to customer loyalty in the telecom industry has simply been paved with quality of service. Let them hear the pin drop and they will come. Give them another megabit of speed and they will stay. That’s going to have to change.

The focus on quality should stay, but the view of loyalty programs should change. It has already started with companies such as Cricket Communications, for example, that launched a loyalty program last week. But the rush to market has been anything but.

Service providers actually may have been well-served by their patience, or reluctance, to join the loyalty parade until now, because most loyalty programs are not being run very well, according to a new report by the CMO Council called “Feeling the Love From The Loyalty Club.” It’s probably best that service providers get it right before jumping in only to frustrate their customers, as 54 percent of loyalty members say they are.

This is especially true because service providers are being compelled to start leveraging the wealth of data they have about their customers and begin personalizing services. Well, that’s exactly where current programs begin to go off the rails and frustrate customers rather than build loyalty. The most consistent complaint by loyalty program members is the barrage of irrelevant and non-personalized information they receive from their programs.

So as service providers prepare to launch their loyalty programs, they can learn something from the brands that have gone before them. The CMO Council report provides some good lessons about where loyalty programs are falling short of expectations and potential and who is doing it right.

One thing working in favor of retailers and other brands is that the consumer is very forgiving when they see the potential for a free reward at the end of the tunnel. In other studies, the Council found that 20 percent of loyalty club members never even received a personalized communication from their company and 73 percent received offers on products they already purchased. Yet 75 percent of consumers have at least one loyalty card, according to Juniper Research and approximately one-third of the shopping population has more than one.