Alas – summer is here and it's time for my annual cleaning ritual. First the house. Then the office. And finally, my personal organizer and wallet. This year, I'm going to pay particular attention to my wallet, which over the last twelve months has grown unusually bloated (it reminds me of that Seinfeld episode where George's wallet explodes all over the streets of New York).

As I sift through the various pieces of paper, receipts, business cards and other memorabilia, I realize that the biggest culprit in the bloated wallet syndrome is the dreaded loyalty card. Or should I say – cards.

At last count, I have no less than a dozen different loyalty cards on my person. It seems like loyalty programs are the latest trend in the CRM movement. Nearly every organization has one. Looking at my own collection, I have cards from airlines, car rental companies, drugstores, gas stations, hotels, video rental stores, health food stores, book stores and coffee shops.

I didn't realize that when marketers refer to "share of wallet", they mean it literally, in terms of bulk space occupied.

But as I sift through my collection to decide which cards should stay and which must go, I ask myself what the value of some of these loyalty programs are – both to me as a consumer, and to the issuers of the card.

In most cases, loyalty programs are really nothing more than simple reward schemes – buy more and receive a reward (points, giveaways, coupons, dollars-off, etc.). From a marketer's perspective, these programs exist with the belief that if you continue to reward customers for doing business with you, they will continue to give you their money. The concept is sound if your loyalty program provides unique value relative to competitive offerings.

But in a crowded (and competitive) marketplace, I'm not sure that's always the case.

Consider the travel industry, as an example. I have loyalty cards for most of the major hotel chains. And each one offers the option to have my hotel points converted to my favorite airline rewards program. Given this, none of those chains will win my business more than others simply on the basis of reward points. Price, location and amenities will continue to play a role in my decision. In other words, none of the hotel chains gains a competitive advantage simply on the basis of having a loyalty program alone.

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ABOUT THE AUTHOR
Michael Shostak is president of Wideframe, a Toronto-based consultancy that combines marketing knowledge and technology to build customer value. Michael can be reached at mshostak@wideframe.com.