Do loyalty programs truly engender customer loyalty? Or do customers keep coming back for other reasons?
If only I had a dollar for every time a cashier asked whether I had one of those loyalty cards ... and another buck for every time I answered, "No." Hey -- give me 50 cents more each time I'm asked if I want one of their blasted cards (no, again), and two smackers if they ask me for my ZIP code. My phone number? They couldn't afford it.
When I laid that attitude on Spence Hapoienu, CEO of Insight Out Of Chaos, I expected a bloody nose. Spence is in the loyalty card business. But instead of an emergency rhinoplasty I got an excellent metaphor: "A loyalty card," says Spence, "is a piece of plastic. Most loyalty programs are plastic. They do nothing more than replace traditional paper coupons with electronic coupons. Why would that generate loyalty?"
Why, indeed? Spence says that when a loyalty program is done right, it transforms a business by using data to target offers to customers based on what's relevant to each individual. Spence counts True Value, Pueblo Supermarkets, and Tesco among the few loyalty marketers who get it -- who understand that they can't expect consumers to be loyal to them unless they are loyal to their consumers.
Soriana seems to be another retailer whose definition of loyalty is anything but plastic. Soriana has a loyalty card program, sure. But by itself, the card does not appear to be the reason Soriana has vaulted past its better-known rivals in Mexico, to the number two spot behind Wal-Mart. As Jose-Manuel Sanchez, the store's commercial director, explains in Forbes magazine, "When a woman consumer goes to the market, she wants to have an experience like what she had in the old markets -- tasting the fruit, bargaining with the shopkeeper, enjoying a social moment."
