With the rise of digital technologies card based loyalty programs are on their way out. Loyalty cards were all the rage not long ago. Retail stores and malls gave them as gifts. You could buy loyalty cards because they promised discounts every time you shopped. You could get an airline card by accumulating flying miles and redeem them the next time it was time to fly.

All such cards work on the premise that a loyal customer is a returning customer and that maintaining an existing one is cheaper than acquiring a new one. However, rise of digital smart technologies sound the death knell for loyalty cards. Shoppers have more choices and online shopping may get them products that cost less than discounted products in local stores. Then there are other reasons why loyalty cards as customer loyalty programs  are becoming a dying breed.

Ecommerce rise

  • Ecommerce these days is not just displaying products online and getting people to buy them because they are attractively priced. There is convenience too. People get products delivered right to their doorstep and that saves them gas, time and effort it needs to visit a local store regardless of their customer loyalty programs.
  • Ecommerce sites are getting smarter. Sites like Amazon employ artificial intelligence to gather data about each individual buyer’s behavior. They make use of AI to offer a personalized experience and product recommendations that result in more sales and better loyalty. That you can easily return products and get refunds or replacement is a big plus. Just imagine the hassle you would have to go through if you had bought a defective product from a retail brick and mortar store.
  • Besides personalized recommendations you can also see ecommerce sites offering huge discounted sales from time to time and points as well as redeemable vouchers as part of their customer loyalty programs.
  • Ecommerce sites also offer premium services such as Amazon Prime that offers even more benefits for loyal customers.

Consumer behavior has changed

  • There was a time when consumers had a close relationship with the local stores and store owners knew regular shoppers by name. Cities have grown larger. Ecommerce has changed buying patterns. Consumers are now a younger breed and with a different outlook as well as shopping behaviors. Loyalty, or even relationship, is not of prime importance. Loyalty cards do not matter all that much when offered by local restaurants and shops. Time is in short supply. Buyers are not likely to drive long distances and spend a lot of time just in order to get a small discount. It is not worth it is their perception.
  • Yet another factor is that a consumer must keep all such loyalty cards in one place and have them at hand when he goes shopping. A consumer loyalty card is not the same as a credit card so you cannot expect people to be meticulous. Cards can be mislaid, lost or even thrown away.
  • Consumers in large cities may not stick around long enough to make use of any loyalty cards. They may relocate. In this instance the card is of no use any longer. They may have to get another card from another store. Compare that to online loyalty programs that have no such limitation.
  • Consumers may not like the idea of being tied down to any particular store when there are dozens of them around.
  • A loyalty card is of no use when the store does not have the product the buyer wants.

Loyalty cards are expensive to maintain

  • Large airlines, restaurants and shops now find that the traditional customer loyalty program of issuing a loyalty card is becoming more expensive by the day. There are costs of preparing the card. Then one must take care of the backend task of maintaining records and accounting associated with the cards. It is becoming a case of diminishing returns as many cards lie unused because number of shoppers asking for these cards is reducing.
  • Statistics may show that such cards are used infrequently. Some may not even use it a second time. So what is the point in issuing loyalty cards? It may be a better idea to offer a discount straightaway.
  • Loyalty cards do not and gather data about customers and their preferences the way digital customer loyalty programs do.

Loyalty is being redefined

Customers these days do not consider just the discount card as being sufficient for them to stay loyal. They need more:

  • Excellent support
  • Fast responsiveness
  • Social engagement
  • Finding the product they want at the right time
  • Returns policy

Customer loyalty programs are of prime importance in organizations. It comes back to the fact that maintaining a customer is better than acquiring a new one. Digital techniques include social media engagement, constant feedbacks, personalized delivery and others. Enterprises and ecommerce sites are gearing up to improve their products and services and offer a delightful personalized customer experience as an inducement for people to stay loyal. Loyalty is about emotional attachment and alignment of perceptions that leads to a positive experience. These days, a loyal customer is not passive. He speaks out on social media and can influence others too. Once loyalty becomes ingrained, discounts become redundant because he will buy no matter the price. There is trust engendered by customer loyalty programs. Cards do not generate this kind of loyalty and trust that endures.

Admittedly companies have to work harder at customer loyalty programs and even spend on various technologies. However, the returns of customer loyalty programs exceed costs. Returns on cards are not profitable from the money or loyalty angle and it should be no wonder that loyalty cards become extinct. By incorporating these simple measures, it is possible to use make sure you can grow as an organization while also managing to keep up with the expectations of your long term clients.

Posted by IT Pathwwway