Once upon a time, “Loyalty” in advertising was an insider term like CRM, CPM, database, quintile, RFM and so on.
You might have run a loyalty program back then but you didn’t call it that in public. If it was called anything, it was a Rewards or Thank You Program.
Loyalty programs have been around forever, it seems. The earliest I remember was Steinberg’s supermarkets’ Pinky Stamps in Montreal. It was the same kind of thing as S&H Green Stamps in the US.
My Mom got a whole bunch of little pink stamps, sheets of them, from the supermarket when she went shopping for our family of eight, six kids and a Mom and a Dad. When she had time, she’d paste them all in little books and when she had enough books, she’d bring them back to the store for … something. She got a lot of kettles, teapots, glasses and casseroles over the years.
You still occasionally see old fashioned loyalty programs like that. The most common is a punch card. You get a card with your name scribbled on it and it’s punched every time you buy, say, a coffee at a Mom and Pop shop. When the card has 10 holes in it, you get a freebie coffee. Simple.
We launched a basic (and extremely effective) loyalty program for Ford of Canada back in the ‘90s. It was new and worked great. All we did was send a coupon (we called it a Certificate) for anywhere from $200 to $1,500 to owners of three year old or older Fords and Lincolns.
Walgreen’s Drug Store (Duane Reade in New York City) has a very simple form of cash rewards. You just enter your phone number on an ATM-like pad whenever you buy anything and discount money adds up in your account. You can spend the accumulated money only at Walgreen’s when you buy something.
The general idea of all of these programs, from Pinky Stamps to frequent flier points to credit card rewards is to keep the customer coming back for more. And, until now, there has always been a direct customer→seller connection.
Watching a new hotels.com commercial the other day, I was struck by a big change. You can get “points” no matter which hotel you stay at as long as you book through hotels.com. The commercial spells it out clearly with the line “a loyalty program that doesn’t require loyalty.” It also requires no connection to the seller, in this case, the hotel that delivers the service.
And therein lies a problem that has been building since companies started saying “loyalty” out in the open.
Who is loyal to whom? And why?
It seems that hotels.com thinks the customer is loyal to the company, based on nothing more than a tenuous cyber-connection. This is a reverse-breakthrough. Until now, the customer could at least pretend that the company was loyal to her. It would be nice if that were true.