retail news in context, analysis with attitude

Inc. has a good piece about how to create customer loyalty programs that work, with suggestions like “create enlightening experiences for the customer”and “resolve customer complaints quickly,” as well as suggesting that businesses do everything possible to quantify the way people feel about them, and to differentiate programs whenever possible.

But there are a couple of other interesting suggestions worth noting:

• “A handful of luxury brands have for decades used promises of status to encourage customers to spend more through loyalty to their brands. Today, brands of all stripes are experimenting with the psychology of status and power in rewarding customers. A generation raised on video games is wired to love incentives—and that doesn't just mean freebies. Gaming reinforces players through positive feelings generated by achievements, which are perceived through points, badges, discounts, or any award—tangible or not. Game mechanics are, simply, ways of generating those positive feelings. And it can be good for you: Giving customers something positive encourages additional interaction with your brand, service, or product.”

• “You know loyalty cards. They might be punch cards, or plastic fobs dangling from countless key rings. They may soon fade into history, pushed out by smartphone apps that do more than just offer a high-tech alternative - they also provide businesses with a trove of useful information about their customers ... Several start-ups have recently launched loyalty-card apps - check out Cardstar, Checkout, PlacePop, and Cardagin - to help businesses attract customers and reward their regular fans. At the same time, these apps ferret out marketing data, giving even the smallest shop access to high-powered analysis.”
KC's View:
Two things here.

First, loyalty programs have to be customer-centric. It always seems to me that too many of these things are created by marketing and/or technology folks who know what they want to get out of the program, but who make ease of use a secondary consideration.

Second, the game theory explained in the piece is interesting ... and backs up the point made in this morning’s Eye-Opener.