Is "Loyalty" actually a good thing?

Loyalty used to be great!

Loyalty programs started out as a great thing. It used to be that a few businesses offered  what we would now call "Loyalty Programs" and they were often businesses where we didn't shop that often. They usually sold things that you wanted rather than needed and earning something felt like a treat. This makes sense. They want to encourage you to buy more than you normally would to earn the reward. At a time when there were fewer programs, earning that reward meant something.

Even if you ended up buying a bit more to earn that free item, it felt special. It was almost like you were one of the VIP customers who the business wanted to have a relationship with. It made you feel valuable as a consumer. Unfortunately, we have advanced to a place where "loyalty" has turned into a key marketing metric for almost every business. This means everyone has "rewards" and everyone wants to create repeat customers. This isn't always bad, but lets look a bit deeper.

Loyalty is everywhere

Loyalty programs encourage you to become habitual. Each business wants a bigger percentage of the dollars you spend. But what happens when every single business is offering their own program? Now, as customer, you need to keep track of everyone's individual card or points or rewards. The rewards themselves become somewhat commoditized and rewards become a de facto part of buying something. Don't worry, those discounts get planned into the prices and we just end up paying a higher price to compensate for the reward we think we earned.

How do customers win?

So what do we have now? We have a type of reward system that is no longer special because everyone uses it, customers who laboriously keep track of points or rewards across zillions of different mediums, and, worst of all, a shifting mentality that making customers repetitive is a good thing. This should scare us all as customers! It does't feel great being described as "repetitive", does it? The result of us being "repetitive" is that businesses can accurately predict what we will do and therefore they don't need to offer us much value to keep us coming back. They have us on the hook. So we are getting less value while being encouraged to minimize our choices. Am I the only one who is a bit uneasy about that?

Businesses should get better, not sneakier

Call me crazy, but doesn't it make more sense for the whole shopping environment if business are continually trying to improve their good or service as a means of retaining customers? Is it a good thing to have loyalty programs are used to try and compensate for businesses that have a hard time innovating or don't want to innovate? It might sound a bit dramatic, but in general I would say that as a customer, the kind of loyalty generated by conventional loyalty programs is driving value down, not up.

What do you think about loyalty? Please leave a comment!

Thanks for reading!

Chris