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Why retailers need to move away from "Us Too" rewards programs that divide loyalty and focus on the customer engagements that improve the loyalty KPIs that matter most.
I frequently shop at two nearby sporting goods retailers and thanks to my wife, am a registered loyalty program member for each. Let that sink in a minute. I am loyal to two competing businesses that sell exactly the same products. Would my wife consider me faithful if I had another wife across town? My wife tolerates many things, but this she would not abide.
So why do successful businesses endure these open relationships, where significant others freely and without consequence disregard their loyal standing with one proprietor so they can spend with another? I won’t pretend to know the exact reason; more likely than not there is a hodgepodge of justifications for launching or maintaining a typical rewards program that strives for true loyalty while settling for far less. The more interesting question is what businesses should do within the framework of customer loyalty to lower their cost of customer acquisition, grow wallet share, and increase frequency of purchases. This is where a typical rewards program with ~3% return on every dollar spent – and comparable to a competitor’s program – will do nothing to move the needle for the metrics that truly matter.
SO WHAT SHOULD LOYALTY MARKETERS DO?
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