Why Loyalty Programs are Not Enough

loyalty cards

There is a bank I am loyal to in Canada. Their fees are high, their Customer Service is not that great and their mortgage rates are above the norm. I still bank with them. The only reason I still bank with them is that they are open late. I do transactions after my office hours. That is the one thing I absolutely need from my bank and they have that.

With customer sentiment at an all time low and a raft of new players entering the banking space, the last thing any financial institution wants to hear is bad news about their brand. But the reality is, consumers view most banking brands as undesirable, boring and wholly undifferentiated. That’s why the battle cry ‘Differentiate or Die’ has never been more relevant in the financial sector.

Creating a non-price service differentiation is difficult in banking or retail because development of such advantages takes time and is difficult to execute. All the while, low-price players are constantly looming to pounce.

Banks and Retailers come up with programs which are usually cash back programs and their “Size of Rewards” vary because their individual business margins vary. It gets more complicated on the retail side because the SKUs you might have a repeat purchase on are volume SKUs and the retailers might actually lose money when they give you rewards.


The latest trend is “individual customer targeted” offers, whereby each customer regularly receives an extensive set of tailor-made offers predominantly paid for by supplier brand-owners in the retail side or by product owners in the banking side. The value of tailor-made offers and their benefit to each individual customer builds with the retailer’s increasing understanding of the contents of the consumer’s shopping basket and previous transactions or the bank combing through customer transactions.

But the big businesses still haven’t nailed down what the single most important thing for them to do to improve the Experience at the “Individual” Customer Level. This cannot come from shopping or transaction logs. This requires a combination of a “Moment of Interaction” with a Feedback mechanism where you constantly interact or observe your customers at every stage of them touching your product or service. This sounds like an almost impossible thing to do but it gets in the realm of possibility if you do the following :

  1. Identify your super elite top 5% of your customers either in terms of spend or repeat transactions.
  2. Execute a community engagement program to elicit relevant segmented or profile based feedback.
  3. Add that insight back into your CRM for future reference . Possibly even add that into the offer generation mechanism or other future interactions.

If you are interested to know How you can get more Insights from your targeted Customers – Join us for a free Webinar on Dec 4th here.

Anup Surendran is responsible for product, services and solution architecture at SecondPrism. His key focus is the product roadmap, day-to-day operations and delivering optimal solutions for clients on time.


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