Do customer loyalty programs really work?

My small store does not have a customer loyalty program. Why? A couple of

Dogs are said to be loyal, are people? Do customer loyalty programs work

reasons. Firstly I’m not sure that customer loyalty programs really work, and secondly I haven’t found a program that suits my needs. It seems now though, that because other stores have them, potential/new customers are expecting me to follow suit. My opinion, which has been formed over the last 3-4 years is that if the goods/ services I supply don’t satisfy the needs or wants of the customer they will not purchase my product, no matter what. So will having customer loyalty program change that? and what is the point of discounting ( as this is what is the usual loyalty reward) if my goods are the best fit, for the customer? And what is customer loyalty anyway, here I turn, once again to wikipedia for the following definition:

The loyalty business model is a business model used in strategic management in which company resources are employed so as to increase the loyalty of customers and other stakeholders in the expectation that corporate objectives will be met or surpassed. A typical example of this type of model is: quality of product or service leads to customer satisfaction, which leads to customer loyalty, which leads to profitability.click here for source

Should a program be required to manufacturer loyalty? To me this seems to go against the essence of what loyalty is or should be.

Today I was really interested in reading the following:

Do customer loyalty programs really work?

“ Loyalty programs should be about demonstrating loyalty to your customers, not about bribing customers to do business with you”

Here is the problem: Most Loyalty programs are focused on rewards, which ends up being the same as bribing the customer to do business with you. Ironically, there is no loyalty in bribery: as soon as the bribe stops, customers will go elsewhere.

What if you thought about a loyalty program in a different way? What if the goal of your loyalty program is to demonstrate your loyalty to customers? Customers that feel appreciated, that feel they trust a company, that believe a company will stand by its principles, will become a loyal customer. Customers will be loyal because they will want to do business with you. Not because you bribed them. Seth says “Loyalty can be rewarded, but loyalty usually comes from within”

Maybe that’s why Forrester Research found no correlation to a small negative correlation between customer loyalty and having a loyalty program.

The key driver of loyalty is good, consistent, trust worthy service that meets the needs of your customers.

The old customer marketing funnel based on the AIDA model (attention, interest, desire and action) is obsolete. The new marketing funnel needs to be customer focused. The new customer model is CSLA (horrible, but hey, acronyms suck anyway): Customer -> Satifaction -> Loyalty -> Advocacy

• You create a Customer when they buy a product or service from you
• Customer becomes Satisfied when you meet or exceed expectations
• Satisfaction drives Loyalty, which is repeat purchases
• Satisfaction and Loyalty make the customer an Advocate that promotes your product or service via word of mouth Click here to read the full article

Is it really loyalty?

What  I want is to build loyalty, not by bribing customers, but by having quality products coupled with outstanding customer service. So do customer loyalty programs really work? In my opinion no, they do not foster what I consider loyalty to be, something that is earned. To me the only benefit is that with a customer loyalty program my store may be on the first to view list when parents are looking for shoes for their children….. Then, if a reward program is their motivator, does that mean my awesome service is not good enough? Goodness this goes round in circles.

The problem is the expectation of a reward by customers/ consumers, they are demanding it, it’s not loyalty, it’s just a bribe!

What about competition

However, none of this discussion considers competition. What happens when a customer likes what I have, but can get the same style, and colour from another store who does have a customer loyalty program.  Some people are fickle and yes, even though I have put the hard work in selling a product, some will still look for the cheapest option.  And I think that is where some of the commentators and experts fall down, they do not take into account the differing personally types of consumers.   Even if  you follow the best Customer -> Satisfaction -> Loyalty -> Advocacy model as outlined above, some customers will still shop on price or the best deal, so it’s for these customers that we need a program, That is if we want their custom.

And yes, I will have to start looking at a program for my store, I am  surcuming to the pressure.