Money On The Tree

I own three (!) large, exuberant dogs – two Golden Retrievers and a Yellow Labrador – who seem to eat much more than their body weight each day. When it comes time to replenish their food, its common for me to go to Especially for Pets, where I know I will spend more, but I will receive far more than at the larger big box retailers. Why? Because their easy-to-redeem Companion Rewards program, coupled with sincere and expertly informed store staff and an outward commitment to dog rescue advocacy, keep me coming back. When I head to the register and hand them my membership card (or not, they will cheerfully look me up without complaint if I don’t have it), there is typically a stored credit rebate waiting. No coupons by email that expire, no restrictions, just money on the tree waiting to be plucked. And I’m not the only one who has this same view and responds in the same way. In a meeting just yesterday a client CEO affirmed the same behavior for the same retailer during a conversation about building a new customer loyalty program for his restaurants. He gets it. He thinks like a customer.

Entrepreneurs and Small Business: Bigger Isn’t Necessarily Better

Why can’t Staples, a far more financially resourced national retailer, figure this out? I’ve been a Staples Business Rewards member since the earliest of days, way before register automation and “big brother” product and brand purchase tracking. My customer loyalty record merits pleasant phone follow-up from my enthusiastic rewards representative (based in O’ Canada when corporate headquarters is 20 minutes from my office, but I digress), expensive laminated discount cards received by mail to incentivize future purchases, and email coupons. But the latter currencies are filled with more exceptions than the IRS tax code that usually result in my not using them. Instead of the simple loyalty building approach of my neighborhood pet store, the planets need to be aligned at a certain trajectory before the coupon that’s good for only HP inkjet cartridges but not the same company’s computer equipment briskly expires—and only if I order online. That message is transparent—the move is afoot to render the store experience obsolete for the lesser overhead of satisfying customers with demand-chain product buying. Consumers are discouraged from comparing products and prices the old fashioned way.

Here’s the newsflash for companies looking to counter the recession with creative customer incentive programs: an aspirational rewards program that deters participation risks far more—the backlash of customer dissatisfaction. Every time I toss another expired laminated discount card or unused coupon I am reminded of this frustration and attach this experience directly to Staples. There is no stored “value” in a restrictive offer that expires and a company that seems tone deaf on the issue (I’ve registered this view with folks I know at corporate and my Rewards customer service representative).

Think Like Your Customer

Customer loyalty programs – whether frequent flyer plans or the two-tiered rewards program of Starbucks – are not new and in fact, in a depressed economy occupy heightened attention of many national analyst firms that generate detailed analytics about their ROI. As with most efforts to achieve enduring customer connectedness, the bottom line impact hinges in communication: what you say and how you say it.

1. Know what the marketplace and your competitors are doing, and beat both.

2. Listen to and seriously consider customer feedback, and let them know you did.

3. Communicate simply and in the way preferred by the customer.

4. Don’t over communicate—too frequent emails are irritating and risk being ignored.

5. Offer an incentive or reward that is meaningful and appealing to drive trial and loyalty.

6. Allow the customer to dictate the purchase venue of their choice.

7. Consider reciprocal partnerships to increase the value of, and participation in, your loyalty program.

I’m sure there are many customer loyalty programs that deserve kudos. Please chime in here or shoot me note via Twitter @loringbarnes .