Can You Buy Customer Loyalty?

Now there’s a loaded question! It seems whenever a group of loyalty marketers gets together a debate breaks out over this topic. Funny thing is, as I observe and participate in these discussions, there is never truly a debate or argument. There are plenty of stances and positions on the topic, but mostly it comes down to a matter of semantics. What does “loyalty” mean? If we all agreed on the precise and singular meaning of every word in our marketing vernacular, we would never argue. But what fun would that be?

So, let’s analyze some common arguments around this and see what they really mean…

“You can’t buy a customer’s loyalty. It has to be earned.”

If you hear someone say this, you can be sure they are considering the emotional meaning of the word “loyalty”, as opposed to the transactional meaning. Most people would agree that loyalty has a strong emotional component. What they mean by this is that you cannot make a customer emotionally loyal to your brand through discounts, rewards, and other pricing levers. You have to earn that through non-purchase behaviors such as service, experience, or unique products.

Can you earn a customer’s loyalty through a rewards program or discount program? Some argue “absolutely”. If the customer appreciates these programs and perceives them as a positive move on the part of the business to show their appreciation, then they can certainly improve customer loyalty. Yes, the emotional kind.

“Loyalty marketing is an oxymoron.”

This statement takes the position that marketing does not produce real, emotional loyalty. It can affect financial performance, but that’s short-term and fickle. Others would argue that loyalty marketing can be much broader than discounts and rewards. It can include messages, especially through owned and earned media, that create an emotional bond. So, marketing can indeed have a positive effect on real loyalty.

“Offers and rewards can increase loyalty.”

This statement takes the transactional view of loyalty. The customer is continuing to choose to purchase at the business – period. They look at the numbers and see that the customers who were sent the discounts bought more than the control group who didn’t. That’s loyalty.

“But wait,” say the emotionals. “That’s not loyalty. That’s retention.” Good point. But again, it’s a matter of semantics.

There are plenty of customers who base loyalty on offers and rewards. Research results from many of our casino clients show that customers have a heightened sense of loyalty to the properties that continue to provide rewards and offers based on their patronage. When those diminish, so does the customer’s loyalty. Just like when the service or uniqueness of the product diminishes.

So…let’s say, hypothetically, we have a high profile, points-based rewards program in place. The majority of our customers sign up and use the program. By all financial accounts, this is a big winner. Panel matched test vs. control segments show double-digit increases in sales and retention rates. The store associates report that the customers love the program. Have we increased customer loyalty?

What do you think?

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