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Customers feel trapped in bad loyalty programs

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Loyalty is evolving quickly with the help of cloud, social, and mobile, but many loyalty programs have been around, unchanged, for decades. These programs are simply not delivering what they should. If not dynamic and individualized, they are surely suffering from diminishing returns and getting lost in the noise of ubiquitous loyalty programs.

While ubiquity is an issue, there’s something worse than being lost in the shuffle. There are programs, typically in the industries that have been in the loyalty game the longest, that incent behavior without creating a positive experience for the customer. Think of airlines and hotels and you have great examples of plenty of repeat business from customers who aren’t truly fans of a brand.

The Walker Loyalty Matrix

Walker loyalty matrix

Walker is a well-known customer intelligence consulting firm that put together a Loyalty Matrix, which is comprised of four quadrants of loyalty. Walker’s matrix lays out the argument that poorly designed or deployed loyalty programs trap customers and may only seem to be working.

In reality, only the truly loyal customer who has a great attitude, combined with favorable behaviors (e.g. repeat business, advocacy), has high value and low risk for the brand.

Creating the truly loyal

The customers who bring the most value for a brand are in the upper right of the Loyalty Matrix. The truly loyal are already in the ideal category, but need to be continually surprised and delighted if they’re to stay in that place. The accessible customer just needs to be encouraged to think of a brand first and to develop habits that make them truly loyal. The trapped can be moved to truly loyal by finding ways to surprise and delight based on their individual tastes and preferences (this whitepaper on customer loyalty management explains how).

Walker loyalty matrix + added insightWhat about the high risk? Before deciding to invest in high risk customers—those who have the combination of a poor attitude toward the brand and are unlikely customers—a brand should focus on the other three quadrants and get the program working first before reaching out to the hardest ones to reach.

The Walker Matrix with this added insight looks like this:

Your organization has the opportunity to capitalize on this plan, but it may involve starting over or building on to your existing loyalty program. The value, though, outweighs the cost of becoming less and less relevant as your competitors move forward.

Published at DZone with permission of Christopher Taylor, author and DZone MVB.

(Note: Opinions expressed in this article and its replies are the opinions of their respective authors and not those of DZone, Inc.)