Bloomingdale’s Loyalty Program Malfunction Prompts Damage Control

Bloomingdale's Loyalty ProgramBrands frequently offer loyalty programs as a way to add value to the customer experience. But the exact benefits that Bloomingdale’s Loyalist members recently received were not exactly what the brand had in mind.

After a computer error placed dollar signs in front of Loyalist points, a few Bloomingdale’s customers were surprised to discover some unexpected account balances. And since Loyalist, like many loyalty programs, has many members with a significant amount of points, this resulted in a potentially very expensive glitch.

Bloomingdale’s Loyalist accounts with 5,000 points, for example, immediately became $5,000. For some, this meant an instant monetary boon of up to $25,000, and at least one person was reported to have leapt at the opportunity to embark on a $17,000 spending spree.

However, it is unclear if Bloomingdale’s can, or will, seek any legal actions or enforce any further consequences for unreturned merchandise.

“Bloomingdale’s may have to live with the impact of the error,” Bill Hanifin, Managing Director of Hanifin Loyalty, told Loyalty360. “Although the Member who cashed in $17,000 of merchandise was most likely knowingly taking advantage of the error, nothing good can come from Bloomingdale's trying to recover money from customers in this fast moving digital world.”

Bloomingdale’s glitch can serve as a cautionary tale to other brands and loyalty program administrators. As our cultural penchant for the rapid adoption of new technology will likely continue, the possibly of similar scenarios should be safeguarded against.Bloomingdale's Damage Control

“The more that business people depend on technology for marketing and communications needs, these glitches will surely occur more often,” Hanifin continued. “The good news for brands seeking to avoid future such incidents is there is a new wave of fraud detecting applications being created for loyalty program operators. The management of fraud, program liability, and online reputation will all be areas where additional investment will be made by brands in the future.”

It would be understandable if this became an area of significant interest for Bloomingdale’s going forward. But for now, however, it has little choice but to deal with the fallout.

“The company caught the mistake last week and is re-issuing replacement gift cards with correct amounts,” according to an official Bloomingdale’s statement. “The company is in contact with its customers and has apologized to those affected.”

Aside from the possible monetary loss, another concern might be the damage sustained to the reputation of the brand’s customer experience. In response to the glitch, some customers said they felt “tricked.”

“In the short term, it damages the brand because they promised something to their customers and then went back on it,” Robert Passikoff, the founder and President of Brand Keys, told Loyalty360. “In the long term, it’s likely that Bloomingdales will count on customers having only short-term memories of their mistake.”

This may be the most probable outcome, especially since similar technological mishaps, such as data breaches for example, are becoming more familiar.

“On the plus side of the Bloomingdale’s equation, 21st century customers have gotten used to database errors,” Passikoff continued. “One would think that there were more customer-friendly ways to admit the error, try and make up for it, and move on.”

This is the delicate customer engagement balance that Bloomingdale’s seem to be trying to find.

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