The Customer Loyalty Program: Evolving With The Times

I can normally spot when I’m engaging with someone who isn’t strongly versed in the experience realm because they commonly ask an incident, and normally sincere, question:

When do you stop working on experience?

The simple answer is, you don’t. As people evolve and change so do their preferences, desires, and motivations. All of these are intertwined into what their experience should factor, albeit for the experience experts in the room we all know these aren’t the only factors contemplated.

Did you know there are over

3.3 billion

customer loyalty memberships in the United States?

This question came rushing back into my mind space when picking up the latest edition of the Harvard Business Review. I often enjoy reading articles in this publication, in fact I have enjoyed them for years. It is no surprise to me that the same familiar smile grazed my face today when opening the mailbox to find the May – June 2021 edition, “Doing Hybrid Work”. The Harvard Business Review always provides good reads!

Although you wouldn’t know it from the cover, there is a thought-provoking article on customer loyalty programs, Why Customer Loyalty Program Can Backfire. The title, alone, can claim guilt for jostling memory to the countless times I have been asked the question on experience, and the general spirit of when does it ever stop. What this particular piece does well is remind us all that there is no stopping. If you embody genuine customer-centricity, you’ll always be hunting for the next best experience. You’ll never stop wondering how the next engagement can be better. You’ll always get goosebumps when you can feel the smile during a phone call with a customer.

The article was written in response to new research conducted by Wharton School professors as they looked at COVID impacts on the customer experience. Here are my take-aways:

Illustration provided by RawPixel: Online delivery food service during the coronavirus pandemic

A customer participating in a loyalty program with a favorite brand before COVID gets MORE upset with an experience failure than a customer not participating in a loyalty program with the same brand.

There is an obvious unspoken assumption by customers participating in a loyalty program that they would be treated with a white glove experience once signing up for the loyalty program. In their mind, ‘I’ll give you loyalty – you give me exceptional service when I need it’. This seems to be showing some correlation because what was interesting to read is the research found the predominance of the customer experience prowess is focused during the time the brand is looking to acquire the customer. But, a diminishing experience effect is happening for the customer once they are deemed captured as a “loyal” customer. Researchers call this the boomerang effect because “… the very loyalty a brand engenders comes back to hurt it”.

To expand a bit more on what the researchers learned when surveying over 7,000 U.S. retail consumers between February and May 2020:

  1. Loyalty program customers had a higher degree of frustration than non-loyalty customers.
  2. Loyalty program customers experienced more friction during their shopping experience.
  3. Loyalty program customers had a higher likelihood to struggle with issues being resolved during their brand engagement.

For a Loyal Customer, on Average it Takes

4 Contacts and 5.1 Days

for them to achieve a solution with the brand

For a NON-Loyal Customer, on Average it Takes

2.8 Contacts and 3.3 Days

for them to achieve a solution with the brand

A question I’m sure you’re asking yourself right now, because I know I was is, “What the heck is going on”? It appears, although a loyal customer is given a dedicated number to the loyalty department, the loyalty department representatives aren’t empowered and capable of resolving the variety of customer issues. They are having to play rotary service ping-pong, bouncing the customer from one department to the other. [Insert sad emoji here!]

So, what’s next?

The article lends 3 pieces of advice to recalibrate from customer experience defection:

1

Keep delivering on loyalty program benefits …

because, believe it or not, these are somehow buffering some frustration temperament with loyal customers as you may need to recalibrate your customer experience capabilities.

Loyal customers still find value with the perks of the loyalty program, so keep filling their cup!

2

Audit your loyalty customer journeys …

because the adage approach to honing on journey opportunities related to what addresses the most frequent service failures needs to be turned upside down.

As shared in the article, “Your most common sources of friction aren’t necessarily the ones that need immediate attention.” Interesting enough, the research showed that there was, in fact, no correlation between the 10 most frequent service failures and the 10 that caused the largest loyalty experience erosion.

3

Customer experience is not only a problem to be solved by the marketing team …

As obvious as it may sound, the responsibility of the customer’s experience involves more than marketing. More companies are waking up to realize this – finally! You cannot silo a loyalty program into a marketing department. Operations, technology, and finance, for example, all should have some onus to facilitating swift and positive customer responsibilities. A great example, in the retail space, a seamless return for a customer cannot be achieved if the POS is incapable of recognizing a repeat customer!

At the end of the day, and back to the original point that evolving customer experience is never ending, the customer experience will always be a top-of-mind initiative. If you think you’ve perfected it, your job isn’t done!

Janey Whiteside, Chief Customer Officer, Walmart

If you’re looking for a good 1-minute read that goes into why violating emotional trust with a customer is equal, if not more impactful when functional customer expectations aren’t met, Janey Whiteside has a good featured page in the Harvard Business Review article I appreciated. I 100% agree with her views and points shared!

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