Loyalty programs a turn off

By AdNews | 31 October 2008

SYDNEY: A number of Australian businesses run poorly planned and executed loyalty programs that are potential liabilities that could turn consumers off, according to a new study.

Companies are designing loyalty programs that are inflexible, don’t provide transparency, have a limited number of partners participating in the program, don’t add value and have the potential to ultimately alienate customers, the study by brand activation agency Kaleidoscope found.

“Too many Australian companies see loyalty programs as an easy way to lock in short-term patronage by offering dubious rewards programs with limited benefit to the consumer,” Kaleidoscope client services director Guy Johnson said.

“If consumers are made a promise, they expect it to be honoured. If it isn’t, then consumers will not just take their business elsewhere, they’ll hold a grudge against that company for some time,” he said.

“Companies need to keep in mind that a flexible rewards system is the best, because every consumer is different. And customer service is absolutely critical. Regular communication is also critical. It just takes a quick email to let customers know where their points are at.”

Johnson said there are some companies doing it right, pointing out that the companies he’s highlighted are not Kaleidoscope clients. He said Amex Membership Rewards provides a high degree of flexibility, with customers able to transfer points to a range of frequent flyer programs, and that there are other rewards.

He also cited Velocity Rewards, run by the Virgin network, Woolworths Everyday Rewards, Coles Express 4 cents per litre and coffee cards offered by cafes as offering good value.

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