Chapter 10: But What About the Loyalty Card? - Does CMR Mean the End of Traditional Loyalty Marketing?

Overview

Some years ago, advertisers would sarcastically say that the value of a radio station’s advertising rate card was that it provided the station’s address and phone number so that you could contact them to negotiate the price for a time buy. Similarly, it can be said the greatest value (to the firm) of a customer loyalty card is that it allows us to capture data to help us better understand customer behavior. The information generated by use of the loyalty card increases our customer knowledge, allowing us to make better decisions across many areas of the company—not just marketing—resulting in improved sales and profits. But, does a loyalty card program necessarily assure customer loyalty?

Brian Woolf, a global leader in loyalty marketing and author of Customer Specific Marketing (Teal Books, 1996) and Loyalty Marketing: The Second Act (Teal Books, 2002), gives a definitive answer: “A loyalty card is not a replacement for any of the basic loyalty drivers but is a supplement to them. Just as a hammer doesn’t build a house, a loyalty card doesn’t build customer loyalty. Both the hammer and the card are tools that, when properly and appropriately used, help bring the architect’s blueprint to life.”^[1]

Jim Barnes, author of Secrets of Customer Relationship Management (McGraw-Hill Trade, 2000), says, “Loyalty schemes must be seen for what they are—not ‘loyalty’ programs at all but rather programs to drive repeat business. As the latter they are generally successful, in that they tend to bring people back again and again, but not because they are emotionally loyal, but because they want the rewards. So, they are more accurately termed ‘rewards’ programs.”^[2]

Michael Lowenstein, coauthor of Customer WinBack: How to Recapture Lost Customers—and Keep Them Loyal (Jossey-Bass, 2001), adds “Loyalty schemes, also known as frequency marketing programs, only have value when they create—and the sponsor uses— information and insight which enables a company to improve value in all areas a customer considers important. The primary role of a retailer loyalty card is to gather data about customers.”^[3]

^[1]Brian Woolf, Loyalty Marketing—The Second Act (Greenville, South Carolina: Teal Books, 2002), p. 5.

^[2]Carol Parenzan Smalley, “Butterflies and Barnacles: Re-writing the Rules of Loyalty,” crmguru.com, September 13, 2002, p. 8.

^[3]Ibid., p. 10.