In a recent article I mentioned that we may look upon this golden age of customer-rewards programs as being wasteful and dysfunctional.
All of those airline miles and bonus points that we've accumulated at restaurants, at the dry cleaners, and even by flying, could come to be seen as foolish and costly pursuits.
This sounds odd, I know, because more than one vacation that I've enjoyed has taken flight, literally, because of these perks. And I've actually seen some cash-back from credit card purchases, as well.
So, am I biting the hands that are feeding me?
Not at all.
Customer incentives do tend to create a certain amount of repeat business and brand preference. But these results, valuable as they can be to all parties, are utterly temporary and are not to be confused with LOYALTY.
In fact, I contend that THE LESS WE GIVE TO CUSTOMERS by way of extrinsic, cash-types of awards, THE MORE LOYAL THEY'LL BE.
Before I explain, let's pause to define.
Loyalty, or the state or an instance of being Loyal, is defined this way by Mirriam-Webster:
Main Entry: loyoal
Pronunciation: 'loi (- &) l
Etymology: Middle French, from Old French leial, leel, from Latin legalis legal
1: unswerving in allegiance: as a: faithful in allegiance to one's lawful sovereign or government b: faithful to a private person to whom fidelity is due c: faithful to a cause, ideal, institution, or product
If airline A gives me half as many miles as airline B, I'll take my business to B.
But it would be foolish to say that I am becoming "loyal" to B. When C comes along, offering twice-again as many miles as B, I'll then fly on C. My business has shifted to C, but not my loyalty, because loyalty never entered the picture.
However, given the same example, if B offered twice as many miles as A, yet I still flew with A, knowing what I was foregoing by not flying with B, then we could infer that I might actually be loyal to A.
You can't buy loyalty.
In many cases it operates independent of, and in opposition to extrinsic rewards.
Example: Right out of college I joined a leasing company that had just acquired a family-owned, smaller firm. One of the account execs from the smaller firm refused to work for the behemoth that cut my checks.
Instead, he opened his own shop and tried to lure away many of his former clients.
We had financial clout that he did not have, plus the added leverage of being able to put people into new cars far ahead of schedule, effectively cancelling their obligations under existing leases, if they leased new cars, NOW.
My employer thought assimilating this acquisition was going to be a piece of cake and it would bankrupt the competing upstart without breaking a sweat. If it did not beat his prices, it would beat him by "bribing" clients with new cars.
He might be able to survive by poaching those accounts that were imminently coming off of lease, but if we re-signed customers that weren't, to new, 24 and 36 month leases, he'd starve in the long run.
Against their financial interests, and defying conventional, behavioral psychology, a large proportion of this gentleman's clients said they were going to keep their business with him, no matter what it cost or how long it took to get into new cars.
This outcome stunned my senior managers, while making their purchase of his old firm much less valuable than anticipated.
"Are clients stupid? What was this guy giving them that we couldn't give even more of?"
In a word, it was LOYALTY. They felt allegiance to him; they liked him, it flowed both ways; and this "good will" was simply not transferable.
Speaking of cars, consider the Saturn phenomenon.
That division of GM inaugurated no-dickering negotiations and created a groupie, almost Jim Jones, let's drink this Kool-Aid now, aura about obtaining four wheels and an engine to move them.
The initiation of buyers into this consumer cult included singing songs, clapping hands, and other campfire, hand-holding rituals. People that bought Saturns made "pilgrimages" to its Smyrna, Tennessee factory, enjoying picnics and rallies with others.
Saturn was tapping into people great desire to join, to feel important, contemporary, hip, to merge into the collective unconscious.
Saturn was creating brand-loyalty. "The experience" was more important to its buyers than getting "a great deal" off the sticker price of a car. (By the way, the marketing-of-loyalty was cheaper for Saturn, than discounts and rebates.)
Saturn wasn't positioning itself as a company, but more as "a cause," perfectly suited at the time to a new generation of Americans that really had no cause.
(To an extent, the hybrid, Toyota Prius, is filling this need now. The "cause?" Global warming, oil independence, and belonging to an elite, denominated in symbols and not in dollars. I asked an older gent how his mileage was: "The mileage is good, but now I get to feel self-righteous, too!" he wisecracked, poking fun at being trendy.)
I love writing about my accountant, Bombastic Byron, because I've been working with him for more than two decades. We have seen each other go from recent college graduates to professionals, and have been through the proverbial good and bad times, together.
Anyway, he is a case study in loyalty.
Somewhere in my psyche I have told myself that we're tethered together in this financial lifetime, and that as long as he can add and subtract, which has sometimes come into question, he'll retain my business.
Ironically, the only thing that threatened this was when he started the odd practice of rewarding me with four Dodger tickets, season after season. I enjoyed the games, but then, without explanation, he stopped this largesse.
This year, he only sent me a $ 5 gift card to the Coffee Bean & Tea Leaf.
This teed-me off, because I got hooked on the Dodgers and considered the gift of tickets an entitlement.
Surprisingly, the introduction of a substantial monetary incentive weakened my ties to him, instead of strengthening them. While I easily forgave him for missing tax loopholes big enough to drive a (leased) fleet of Hummers through, I was much less generous about the foolishness regarding his client rewards "program."
In the next article you'll learn exactly what The Psychology of Loyalty is all about, and especially why, if it's loyalty you're after, you should never, ever try to bribe your way to obtaining it.