The notion of Loyalty Rewards has become fairly popular in the business world.  PetSmart has Pets Perks.  Macy’s has its own loyalty credit card with 15% off all purchases. And, at Shutterfly you are immediately rewarded the moment you create an account.  But is that it?  Is loyalty rewards just a great way to track purchases and get your customers addicted to coupons?

Some ways I’ve seen loyalty rewards go wrong is when a program turns customers into spoiled brats, instead of loyal tribe members.  The consistent attitude in this flop scenario is always, “What do I get?”  Companies have to put great effort and money into begging their current customers to act.  They won’t budge until they see a company grovel and discount away.  What was meant to be mutually rewarding, turns into mutual manipulation not unlike codependence.  Another flop-bound approach is to offer cheap trinkets for action. It’s just plain insulting.  Continuing  with cheapness will result in the opposite of loyalty–resentment and apathy.  So what is the key take-away from these flops?  Loyalty is NOT reciprocity: the kind of reciprocity that is drenched with obligation as opposed to gift-giving.

What is loyalty?  It’s what you do when there is a strong sense of “win-win” within a group of friends, family, or tribe.  When people are loyal, they do, buy, or go places for you because they want to–the very interaction with you as a person and a whole company is truly enjoyable.  Loyalty IS the reward, and not just for the company making money, but the customer too.  Developing a loyalty rewards program takes  creative planning and sincerity.  Depending on the company, product, or service a program may involve actual gifts given with the intent to delight and surprise.  It may mean getting involved with “tribal” events.  The point is for companies to come in from the cold, and stop being the desperate gypsies servicing a culture or market. With a good loyalty rewards program, a company can actually be an integral member of a culture, a tribe, and become wealthy in the process.

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