Beyond Points and Tiers: Does a Loyalty Program Create Loyal Customers?

Are your customers brand loyal or promo loyal?

Most loyalty programs measure activity instead of attachment, so they quietly fill the customer base who are loyal but unprofitable and who cost you money every time they show up. This report introduces the subsidy test, a simple way to tell real loyalty from paid-for loyalty. It also breaks loyalty into four types based on what it costs a customer to leave: utility, invested, relational and identity. You can use these types to see which mix your business actually has today, and which one you want.

There is no best-practice loyalty program to copy. Costco’s membership and GrabUnlimited’s look similar on paper, but the economics underneath are opposite. So instead of a template, the report gives you a three-question framework to test your own conditions before you build or fund anything:

• Frequency: How often do you meet your customer?
• Margin: What does a reward really cost you?
• Pride: Would anyone show it off?

For each, you’ll get practical recommendation to build a loyal customer base.

Download the report to find out whether a loyalty program is the right tool for your business.

Jason Chriselino