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The Right Way to Reward Your Customers

Guest post by John Carvalho

In today’s fragmented marketplace, true brand loyalty seems like a hard thing for companies to acquire and harder still for companies to hang onto. Yet, it’s arguably ever more important.

Loyalty programs are a key tool for doing so. From a psychological standpoint, allowing consumers to earn and use perks lead to feelings of status, stronger brand-consumer relationships, increased word-of-mouth, and increased purchasing intentions. […]

By |September 17th, 2013|

The Fatal Flaw in Loyalty Programs (And How to Minimize Damage)

Loyalty and rewards programs can be great motivators. When a business rewards the behavior they want from their customers – say, giving them a free coffee after they consume nine – they encourage that behavior. The most potent loyalty programs go beyond mere periodic freebies and confer status. […]

By |July 31st, 2013|

Starbucks Loyalty Fail

Starbucks knows a thing or two about loyalty. I’m a Gold Card member, and enjoy the free refills as well as the periodic free drinks I accrue by using it. (Green Card members get the refill benefit, but not the free beverage after every 15 purchases. In addition, Gold Card members get a personalized card in that color and, theoretically, are addressed by name by the baristas.)

Many other coffee shops offer complimentary in-store refills to all customers, but Starbucks has converted refills into a loyalty benefit. (Similarly, Starbucks has put their own spin on the ubiquitous “free wi-fi” offered at most establishments. They created their own portal with special content like free access to pay sites like WSJ.com and NYTimes.com.) So, I was surprised when normally savvy Starbucks sent a friend this message: […]

By |January 17th, 2012|

When Loyalty Points Beat Price Differences

Every merchant seems to have a loyalty program these days. It makes sense to reward customers for their patronage and encourage even greater frequency. But, it appears there’s one kind of loyalty reward that may be more effective. One study showed that “irrelevant information” (in this case, largely valueless loyalty points) changed consumer buying decisions. […]

By |March 1st, 2011|

Loyalty Programs: Of Rats and Men

It seems like everyone has a loyalty program these days. Buy a cup of coffee, and you get a punch card that promises a free cup after you purchase some number of additional cups. Shop at the grocery store, and you get points to reduce the price of gas. Our wallets bulge with partially punched cards, and our keyrings are stuffed with plastic bar code tags, all in the name of loyalty. (And, of course, you have to add the original loyalty programs – airline frequent flyer clubs and credit card reward programs.) Do these actually work? […]

By |December 4th, 2009|