Brand and customer loyalty has been a hot topic for the past few decades. Since American Airlines started its first “Frequent Flyer Miles” program in the 80s, companies and brands all over the world have been coming up with new and interesting ways to capture attention and reward their faithful consumers for buying their products or using their services.

Traditionally these would come in the form of a barcode card, key fob or printed coupons. These schemes offer a combination of rewards and recognition, in order to drive up sales and customer retention rates. Credit card companies are notorious for their offers, with the majority now handing out flight miles, cash back, credit points and prizes if someone makes a purchase on the card. Through this, the idea is that they are helping the customer to stretch their budget that little bit further and keep them coming back for more.

Despite this, almost half of people still do not participate in these loyalty programs. And only half of those again are actively using them. So why is that? Could it be that most reward schemes come down to only one thing: freebies? As the concept has gained popularity over the last couple of decades it’s easy to see how it can be a double edged sword.

The problem is that it’s possible to get it wrong. While offering free stuff to customers the more they buy, an aggressive campaign could feel almost like a bribe, whereas a complicated system with different tiers and structures can only serve to confuse and confound the customer. Take Starbucks as an example:

My Starbucks Rewards

Last year, Starbucks introduced a Gold membership card. A customer could pay $25 dollars for a year membership, and in return they would get 10% off their purchases every time they went into Starbucks. For hardcore coffee drinkers this could equal some serious savings. The card would pay for itself in a matter of a month or two (or even a few weeks if you were a serious caffeine addict). (more…)

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