Loyalty versus Appreciation
In responding to an RFP for a major consumer retailer today, I was struck by a definition that’s deceptively simple: Loyalty Programs incent customers towards positive future behavior. Appreciation Programs reward customers for past loyalty to the brand.
These definitions highlight the problem with a number of existing consumer brands.
Take, for example, AT&T Wireless, with whom I have been a customer since 1998. My average monthly wireless bill is around $600.00. I have three separate wireless phone numbers with AT&T, and upgrade my phone at least every six months, paying full retail value.
Traditional “loyalty” thinking will tell you that AT&T Wireless should not spend any additional money giving me incentives because I’m going to continue to spend the same amount of money whether they give me a rebate, or points, or anything of the sort. They would, in fact, be right.
What AT&T Wireless seems to have forgotten, though, is that I happen to know that I’m a damned important customer of theirs. I happen to know that I’m in the 90th percentile of their high-spend customers. I also happen to notice that I get absolutely no special treatment. No occasional email or letter thanking me for my business. No special phone number to call so I don’t have to wait 20 minutes in a call-queue. No appreciation.
As a result, I have decided to take my business elsewhere—I’m courting other carriers, armed with my AT&T Wireless statements, and seeing what they’ll offer. I’d do it even if I were getting miles for my dollars spent; or a $10 rebate for every $1000 spent. I don’t want discounts, I want appreciation.
Consumer companies that subscribe to the logical segmentation of customers, and identify “high value customers” who don’t need a lot of communication will do well to consider fixed-cost high-perceptive-value appreciation programs that help keep the customer happy.