Do Customers Care About Loyalty Programs?

Posted by Ron Stephenson on Thu, May 09, 2013 @ 01:25 PM

Recently I read an interesting article about Loyalty Programs,, in which the author argues that customers really don’t care about loyalty programs as much as companies think they do.  The author makes several compelling arguments for this and provides a few examples of customers who show brand loyalty without having a loyalty program.  He argues that products and services should differentiate themselves from their competitors by offering a better product or better services.  While I do agree with this statement, I think the author has generalized too much and left out some key areas where a well-run loyalty program can be successful. 

I’m sure there are many examples, but I believe the most obvious are convenience stores (c-stores).  Let’s face it, gasoline is all pretty much the same and it’s very difficult to offer a better product than your competitors.  Modern cars will run well on most gas, even lower-octane gas, so trying to convince your customers that your fuel is superior to the fuel right across the street is a tough case to make.  However, offering fuel discounts to the members of your loyalty program is an excellent way to distinguish your c-store from your competitors.  Even a few cents off per gallon is a strong incentive for customers to join your loyalty program.  I’ve witnessed long lines at c-stores that sell fuel for two cents cheaper than the neighboring c-stores, where the pump islands were nearly empty. 

Loyalty Programs


The fuel discount program will bring customers to the pumps, and a frequency or discount program will bring them into the store, which, of course, is the ultimate goal.

While I understand the author’s argument in his article, particularly his annoyance with having so many loyalty cards in his wallet (which is usually resolved by simply providing a phone number instead of the card), I think he has overlooked the many products and services industries where loyalty programs can and do provide customers with a compelling reason to choose one company over another.

Tags: Loyalty Marketing