The thing about loyalty…

Customer loyalty is top on the list of strategic goals of many companies, and to my thinking that is very last place it should be.

Loyalty isn’t a “goal” to be reached. It is the result of doing the right things for your customers (and, yes, we can expand that to include employees and partners, etc) over the long haul.

I highlighted a great example of what builds loyalty in a blog earlier this year, but in these more difficult times, it’s a topic worth revisiting.

The very mindset that tries to make a program out of loyalty is doomed to take the wrong direction, and that’s exactly why so many loyalty programs fail.

One of my favourite examples of a loyalty program run amok is Barnes and Noble bookstore in the US. Its “loyalty” program (and I use the term loosely) is to buy a $25 loyalty card which gets you 10% off books you buy at the store. So what’s so wrong with that… let me count the ways:

• It is not rewarding loyalty – anyone can buy one, even if I have never shopped there before.
• You can’t buy affection and you certainly can’t buy loyalty.
• The odds are in their favour that they will profit from the deal as I have to spend $250 in books to return my investment on the card.
• The books are already discounted so it actually takes me longer to reach my payback.
• Discounts don’t make me loyal, money is only part of the equation.
• And on and on.

Barnes and Noble is not the only store to use this lazy form of buying loyalty. And why not? It’s easy, they don’t have to do anything more than they already do – sell you books. But here’s the thing about loyalty – it works best when it is a two way street. I give a bit, you give a bit and we both get something. I care because you care. It is a relationship, not a transaction.

Now let’s consider the loyalty program of another book store. They are the largest independent bookstore in US, called the Tattered Cover. Anyone who has spent any time at all in Denver, Colorado has either heard about or been to the TC. It is a community institution.

Its loyalty program is called “Tattered Cover Gives Back”. Customers are invited to join the free program that pays a percentage of every purchase to support a local charity of your choosing. All you do is sign up and buy as you normally do, they do the work of distributing the funds.

To say thanks for joining, you get a 10% coupon to use and, at the end of the year, (but in time for Christmas) each “Gives Back” member gets a thank you in the form of a 25% discount card.

The difference between these two examples couldn’t be more stark.

In these more difficult times, we all need all the loyalty we can muster. The start is to realise you have to give it to get it. Be prepared to give in order to get, and build loyalty programs that are a reflection of what you care about and that truly reward others. That’s the thing about loyalty…

Michel is taking a break from her SmartCompany blog for a couple of weeks. This article first appeared on July 22, 2008 and was specially picked by Michel for republishing.

Michel is an independent adviser and advocate dedicated to helping organisations make promises they can keep and keep the promises they make – with a strong, resilient organisation as the result. She also publishes a blog at michelhogan.com. You can follow Michel on Twitter @michelhogan.