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What is Deal Loyalty?

The Edgell Knowledge Network found in a recent study that actual brand loyalty among consumers of partner loyalty program is not any different than consumers who were not part of the loyalty program. In other words, there appears to be no significant difference in loyalty between consumers who were members of a loyalty program and those who were not. The same study found that approximately 81% of the members in a loyalty program did not fully understand the entitlements associated with loyalty nor how they could claim the program loyalty rewards. According to the results from the same survey, the average consumer belongs to approximately 18 different loyalty programs.

It’s been noted in this blog in the past that customer satisfaction is an instantaneous measure that reflects only the outcome of a particular event. Loyalty programs that provide points or rewards for a single transaction of some type are nothing more than relabeled customer satisfaction programs. The idea of providing rewards as incentives does not create loyalty. Some researchers describe this type of loyalty as “deal loyalty,” since it contains no aspect of relationship building and only depends on the “deal.” The customer is “loyal” only as long as the “deal” is offered.

True loyalty programs are built on the basis of establishing a long-term positive relationship between the company and the customer and is not accomplished with a single “deal” or even multiple “deals.” Loyalty of customers comes from the relationship between the customer and the company without the need for an instant reward. The reward is the relationship.

Since there is no apparent difference in loyalty between customers involved in a loyalty program and customers who are not, the question is, why bother with that type of the loyalty program. If the money spent on a loyalty program that provides points or rewards of some type were redirected to building individual customer relationships, the long-term benefit would probably be significantly greater.

The bottom line is that there is no shortcut to customer loyalty.

This article was originally published by The Customer Institute

Published: November 19, 2013
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Bill Bleuel

Dr. Bill Bleuel is an award-winning Professor of Decision Sciences at Pepperdine University’s Graziadio School of Business and Management. Dr. Bleuel’s expertise lies in the quantitative aspects of business. He specializes in the measurement and analysis of operations, customer satisfaction, customer loyalty and customer retention. He has held senior positions in engineering, marketing and service management at Xerox, Taylor Instrument Company and Barber Colman Company. Dr. Bleuel has also experience as general manager in two start-up companies that he co-founded.