Is your customer loyalty program really creating loyalty?

Of all the intangible assets an organisation can accumulate, loyalty is perhaps the most powerful. Be it an airline, retail store, professional services firm or a non-profit, the trust and allegiance of satisfied customers is invaluable to all.

Of all the intangible assets an organisation can accumulate, loyalty is perhaps the most powerful. Be it an airline, retail store, professional services firm or a non-profit, the trust and allegiance of satisfied customers is invaluable to all.

However, loyalty can be hard won and easily lost. We’ve seen this play out recently with major brands such as Qantas, which once had a fiercely loyal customer base and was considered a symbol of Australian pride. This reputation didn’t happen overnight, and the company’s commitment to building customer loyalty was forged over many years of delivering a superior flying experience. Yet something has clearly changed in recent years, with people taking to social media to voice their dissatisfaction about the airline’s shift to a more transactional approach.

Loyalty can never be taken for granted, particularly at a time when the competition in almost every industry is stronger than ever. People who feel like their relationship with a brand is based solely on transactions – give and take without a deeper connection – can easily be swayed to another that’s willing to offer a product or service that is something special.

Weighing the cost of loyalty programs

It’s not to say that consumers are completely fickle and will switch brands at the drop of a hat. Most realise that any organisation can make a mistake and, when they believe in a brand’s bigger picture, are willing to brush off a delayed flight, bad experience, or even higher prices.

The trouble with incentives such as loyalty programs is that they do little to nurture this type of connection. They are truly transaction-focussed, prompting customers to scrutinise every mistake and weigh it against what they’re getting in return. For example: “Are my points, rewards, and discounts really worth this or better than another brand?”.

This limited emotional connection wanes even more when customers start to question what is actually being done with the data they give up as part of being in the loyalty program. We’ve recently seen more media coverage surrounding data mining, referral programs, marketing campaigns or loyalty programs which track spending habits and preferences, then sell that data or use it to target customers more effectively. As awareness of this builds, organisations need to be confident that their existing customer loyalty is founded on more than just the transaction. Any customer who sees through a loyalty program reduces it to one of pure convenience, and this can be found elsewhere.

It's easy to spot the increasingly transactional nature of loyalty playing out in the marketplace, driven by an overemphasis on data. While obviously helpful, big data has led companies to lose touch with ingenuity – constantly viewing brand experiences through a quantitative rather than a qualitative lens.

The brands that don’t take this approach clearly stand out, using data and loyalty programs as secondary to time-honoured methods that have sustained them for decades. This typically includes going above and beyond to build and maintain customer relationships – always remembering that it costs more to acquire a new customer than keep an existing one, and that organic referrals are the best way to attract new customers.

These principles apply to every organisation, including non-profits and even schools, where we see time and again that those that build lasting relationships with their community fare much better by way of bequests and donations.

A return to the fundamentals of loyalty

The rise of data, AI and automation might make some processes more efficient, though we must never forget the fundamentals of the human experience.

Loyalty cannot be bought – whether from consumers or even employees in a workplace. As a key part of any great organisation's culture, we see that staff retention rarely relies on perks but a deeper sense of feeling valued and connected. Employees who feel like they are part of something bigger, naturally become more loyal to their employer.

The way to cultivate and increase customer loyalty is as unique to one organisation as it is to another. You need to help people feel like they are part of something great when they engage with your business – that they are valued beyond money or data, and that you genuinely care.

At RSM, we’re very proud to have cultivated such a loyal client base over our history which now spans more than 100 years. We have worked with some of our clients across generations, from grandparents and parents to their children, assisting with their family businesses, estates, and more.

For us, loyalty is quite simple. It means being there. Showing up every day, and meeting our clients exactly where they are so we can dig deep and help them in every way we can. When you do this and really mean it, the rewards are always there, and in more ways than one. 

You can leverage the expertise of our people at any stage of your business lifecycle, to help you make astute decisions that ultimately have a tangible effect on:

•  your organisation’s reputation in the marketplace
• relationships between board members and executives
• workplace dynamics
• future sustainability and growth

Need expert advice? Contact RSM today

From strategic advice to internal audits, business restructuring and so much more, we're here to help position your organisation for success so you can focus on building the kind of loyalty with your customers that we've been honoured to achieve. Get in touch below >>