Seinfeld on Marketing: Loyalty programs

Let’s face it; your loyalty program may not be fostering loyalty. In fact, if done incorrectly, your punch card or exclusive discounts and offers may be actually hurting you. Take for example this Seinfeld episode where Elaine it trying to earn a free submarine sandwich at Atomic Sub:

(Elaine is digging into her purse)
ELAINE: Oh, I can’t believe it! I’ve lost my “Atomic Sub” card!
JERRY: So?
ELAINE: I’ve eaten 23 bad subs, I just need 1 more! It’s like a long, bad movie, but you want to see the end of it!
JERRY: No, you walk out.
ELAINE: Alright, then, it’s like a boring book, but you gotta finish it.
JERRY: No, you wait for the movie!
ELAINE: (Irritated, and through clinched teeth) I want that free sub.

Loyalty is earned overtime by consistently providing your customers with memorable customer experiences. If your customer experience is faulty (for example, “bad subs”), then the increase in negative word of mouth from your loyalty program can actually propel your business into inexistence faster. Remember this formula:

Bad customer experience + loyalty program = accelerated extinction

Before you start any loyalty program, make sure your customer experience is rock solid.

Happy Friday everyone!

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9 Responses

  1. How about this approach: Design your loyalty program to better understand your customers, and use that data to improve the customer experience.

  2. Ron,

    That’s just crazy enough to work! 🙂 I might suggest a slower role out to work out the kinks in the customer experience before a full start. What do you think?

  3. I think firms should start looking to their loyalty programs to help build “emotional” loyalty on top of the “economic” loyalty many of them are designed to drive.

  4. Ron,

    As always, very smart. Thanks for stopping by.

  5. Can loyalty programs sometimes be over-thought? By that I mean that we as humans/consumers naturally want to be loyal to what we’re emotionally connected to. Does asking for it too aggressively sometimes equate signing someone up for the music club you’re in just so you can get 4 free CDs?

  6. Brett,

    Great question. I believe that true loyalty cannot be purchased nor can it be forced. Take, for example, a customer that is in the middle of a cell phone contract. Having this contract does not necessarily mean that she is loyal. This may just be a case of “mandated loyalty”, if there is such a thing.

    Having said this, I do believe that loyalty can be influenced. But to do this I feel that we must think of loyalty beyond the confines of a “program”. I believe that relentlessly focusing on delivery relevant experiences that your customers actually want will naturally produce the most fertile grounds for the seeds of loyalty.

  7. […] in setting them up (and therefore keep telling you they’re successful). Either way, UberEye has yet another great observation that gloriously combines two great things in life: marketing and […]

  8. I looked all over the internet and it seems to me that there are no “loyalty failures”. I was searching for abandoned loyalty programs, I haven’t found a single one. I guess then :
    Loyalty programs + accelerated extinction = never happens in loyaltyland
    Do you have any example of failures???

  9. Loyaltyland,

    Great question and thanks for your comment. When I wrote the post, I did not have any specific cases in mind. However, one of the oldest frequency gimmicks is the music/DVD/CD clubs. You know the ones…”buy 1 regularly priced item and get 12 free.” The customer experience is completely worthless as the often try to capitalize on the pains of “jumping through hoops” to cancel instead of actually providing grounds for loyalty. I think many of us have either fallen victim or know someone who has so eventually these clubs will run out of customers to abuse and will fold.

    However, when I wrote the post I was simply stating that if the customer experience stinks and you try to work around this problem with a loyalty program, then the increase in trial (from the program) will be negated or even damaged by the by the spread of negative word of mouth. Thanks for stopping by!

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