By John Malmo
http://stream.publicbroadcasting.net/production/mp3/wkno/local-wkno-986250.mp3
Loyalty Programs: Good or Bad? by John Malmo
Memphis, TN – American Airlines introduced the first travel industry loyalty program thirty years ago. Soon after, every other major airline duplicated the program. Then every lodging chain added a loyalty program.
Whether these programs have successfully accomplished their original objectives is a subject for another day. But they may create more disappointment among customers than loyalty. Most program sponsors keep rewards costs as low as possible. That often frustrates the redeemer of loyalty rewards, the most frequent of whom are the program's best customers.
Most airline programs have tight restrictions on redemption. So they frustrate their best customers. When you redeem hotel reward points the hotel routinely puts you in its cheapest and least desirable room. So, they reward their best customer with their worst room.
Several of my customers have asked me if I thought they should consider a loyalty program. First, I say, you should know that if it works, competitors will duplicate it quick. So you'll lose any advantage. And be sure you realize how expensive it will be to administer and reward properly.
Your best customers always should get your best. Not your cheapest.
John Malmo is a marketing consultant who concentrates on helping business owners grow their businesses with effective marketing. To reach Mr. Malmo, hear and read more of his commentaries, or ask him a direct question, go to AskMalmo.com.
To download this or other John Malmo commentaries, or to subscribe to the Malmo commentary weekly podcast, check the iTunes store, or click here.