Loyalty programs are one of the oldest marketing tools — and one of the most misunderstood. People think 'loyalty' means stamps on a card or an app that nags them for stars.
Real loyalty is about two things: repeat purchases and recommendations. You want the same customer to come back more often, and you want her to tell her neighbor to come too.
Three levels of loyalty
- Behavioral: customer returns because you are convenient, cheap, or close.
- Attitudinal: customer prefers you even when an alternative is cheaper.
- Active: customer recommends you and is an ambassador for the brand.
A good loyalty program moves customers up these levels. A bad one only rewards the first and leaves the rest on the table.