The Best Customer Loyalty Programs Don’t have Points
Customer loyalty programs are ubiquitous. All around us, companies are offering points, rewards, credits, badges, memberships and more, to encourage us to buy more stuff and continue choosing them over their competitors. There’s no question that these practices are effective, but what do they have to do with customer loyalty?
The answer is: Nothing.
Don’t confuse being a hostage with customer loyalty
I remember my mother ranting about how people were more loyal when she was younger. She talked about going to the same gas station, the same butcher, the same grocery store, etc. As I got older, I realized that their purchase decisions had nothing to do with loyalty. My mother, her family and friends went to these places because were the only ones around. They were the most convenient, and often staffed by people she knew. People weren’t loyal back then, they were hostages.
Not understanding the essence of real loyalty becomes a problem for businesses who mistakenly attribute high sales to customer loyalty. Think about all the retailers who had gotten complacent before Walmart and Amazon came along
Bribery and Entrapment don’t equal customer loyalty
When a company says, “Hey, we’ll give you this bright, shiny thing if you buy something from us,” that’s not loyalty – it’s bribery. When customers are offered memberships to collect points for discounts, special privileges, etc., that’s not customer loyalty either. That’s entrapment.
Does bribery and entrapment work? Absolutely. But the instant another company comes around with a brighter, shinier trinket, or more and fancier membership perks, customers will defect in a heartbeat. Loyal customers don’t defect so easily.
Real, sustainable customer loyalty comes from trust
Think about the people you’re loyal to. The one thing they all have in common is that, at some level, you trust them. The reason your friends become your friends is that you trust each other. The reason you go to the same hair dresser, dentist, mechanic, etc. is because you trust them. Trust creates a bond that is only broken when the trust is broken.
What exactly is customer trust?
Research tells us that customer trust is created by Caring, Competency and Integrity. When we believe a person or company cares about us, is good at what they do, and acts in our best interests, we trust them.
This, in essence, is the best (and only) customer loyalty program – one that delivers these three things.
How to earn and keep customer trust
Customer trust is created and sustained by following a few essential principles. Here are examples for customer service, and the broader, organization-wide scope of customer experience:
Creating trust through customer service
- Convey in your words, tone of voice, body language and actions that we genuinely care about each individual we interact with.
- Be good at what we do, and always look for ways to increase both knowledge and skills
- Make decisions and recommendations that are in the customers’ best interests.
- Do the things you say you are going to do, and do them well.
- Don’t over-promise or under-deliver
Creating trust through customer experience
Think longer term
If you offer warranties or guarantees, don’t make them so restrictive that they’ll only serve to frustrate customers. The hit a company will take on profits by having better warranties is nothing compared to the hit from lost customers. Frustrated customers will stop trusting you, and when they stop trusting you, you lose their loyalty.
Have customer support that is robust, immediate and excellent
If your company creates time-consuming barriers to service, or pushes customers to self-serve or crowd-sourced solutions, you send the message that you don’t care – which causes loss of trust – which causes loss of loyalty.
The same is true if your company has no human contact – and only provides customer service via email, tickets or chatbots. No matter how you try to frame it, customers understand that your company doesn’t really care about their customers. Why would they trust you?
Measure the right things
Common metrics like Net Promoter, Customer Effort, Customer Satisfaction and Customer Value are all fine, but all are antecedents of trust.
Why would someone recommend you? Because they trust you. Easier processes, greater value and satisfaction are also all based on the three pillars of trust. Measuring the three pillars directly will provide you with information that is much more meaningful.
Customer loyalty is about people
There are zillions of ways to win over customers. But there’s only one way to build long-term, sustainable and profitable loyalty: Build trust, then never do anything to jeopardize it.
Remember that, ultimately, your success in life and in business will not come from transactions, it will come from relationships.