Recently, I received a message from my bank that my points were about to expire. So that the awarded points do not expire, the bank recommended that I transact more. Is my bank even aware that I have no idea how its points allocation system works? What am I supposed to do with the points earned from the bank transactions? At least with my telephone service provider, I know that I can redeem every reward point for 30 cents. I had some loyalty points on my Nakumatt and Tuskys loyalty cards; I wonder if these points would make me want to go back to these two stores. I wonder what I am supposed to do with the points on my Zucchini card or my Carrefour app. I have just found out that I need a minimum of 10,000 points to redeem a Ksh 1,000 voucher at Carrefour. Do the awarded points drive customer loyalty?
Loyalty does not result from the number of points a customer has accumulated. Customer loyalty is evident when customers choose a company’s products and services consistently over another. This choice is based on value not on price. When Apple launches a new iPhone, its customers wait in front of stores to get their iPhones. Apple has many hard-core loyal customers who buy their products repeatedly. I doubt if Apple awards any points when one buys their product. What I am sure about is the emotional connection Apple has with its customers. Customer loyalty has placed Apple where it is today. Loyal customers are unquestionably good for every business. How loyal are your customers?
Creating a loyal customer base should be a key objective for every smart business leader. Loyal customers not only come back repeatedly but they are likely to refer others. Loyal customers do not often use competing products, and they give us time to fix any issues because they trust us. Loyal customers are likely to give positive reviews and share feedback about how to improve. However, not all customers are 100% loyal to a business or product. Some are loyal to two or three companies or products, others shift their loyalty, and some are not loyal to any company or product. Smart companies should intentional about driving customer loyalty.
Customer loyalty is only possible when we appreciate what drivers it. Positive past experiences, high-perceived value and high product quality drive loyalty. Other top loyalty drivers include good brand image and positive customer feelings. I believe each of these plays a more significant role than the mere allocation of points. Every smart business needs an ongoing positive relationship with its customers. In the 1700s and 1800s, redeemable copper coins, copper tokens and stamps characterized customer loyalty programs. In the 1900s, card-based loyalty programs became very popular. The growth of frequent fliers programs, hotels reward programs, retail discounts and cash backs happened in the late 1900s. Today, we have many innovative customer loyalty and reward programs. Unfortunately, many businesses still focus on awarding redeemable points based on the number of transactions. Allocation of redeemable points without a focus on loyalty drivers is unlikely to steer customer loyalty!
Dr Lucy Kiruthu is a Management Consultant and Trainer. Connect via Twitter @KiruthuLucy