Over the years, I’ve talked a lot about customer loyalty — the type of behavior that results from great customer experiences and drives additional revenue through repeat purchases and word of mouth. What I haven’t talked about so much are loyalty programs — initiatives that are specifically created to encourage repeat business.
Loyalty programs and customer experience initiatives have the same common objective: to encourage customer behaviors that benefit the business. And yet, the two types of initiatives take very different approaches to that end. Customer experience teams seek to drive loyalty by making the company useful, easy, and enjoyable to do business with: “Be loyal to us because you love us.” In contrast, loyalty programs seek to drive loyalty through a system of perks and rewards: “Be loyal to us because you’ll get something in return.”
It’s very possible that a company with a compelling loyalty program can get away with having a subpar customer experience, and yet still have what appear to be loyal customers. Here’s an example...
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