Why are so many loyalty programs like the proverbial shag on a rock? They seem to sit isolated from the core brand offering. In many cases they actively work against what you are trying to achieve. Loyalty and reward offerings should be building brand equity not dragging it down.

In many cases it’s due to reward or loyalty programs merely being a competitive response – they’ve got one so we should too. A key distinction though is that others may have built a loyalty program rather than developed a loyalty strategy.

The loyalty offering isn’t grounded in the brand, or structured to reward and drive the right sort of behaviour. It could end up becoming a drag on the business to the point where you’re trying to work out how to reduce its cost rather than reward and influence customer behaviour.

Yes, you should keep an eye on what your competitors are up to in so far as it affects your brand and business. But having a loyalty program or not is a business decision based on the return it can deliver and how it fits in with your overall loyalty strategy. And like any such major initiative it needs to be properly designed, costed and delivered so as to build brand equity.

If you aren’t too sure if your loyalty program is aligned to your brand I suggest you ask yourself some simple questions:

• How does is it look and feel? If you took the branding off your loyalty program would customers pick it as part of your offering… or at least ascribe similar brand values? Is the core of the program the core of your brand? Are you giving cheap key rings for a luxury car brand? Extreme adventure holidays for a credit card that targets over 50’s? (Yes, real examples!) While coalition programs (like FlyBuys and shopping centre cards) are a great way to deliver rewards in a cost effective way, they are very difficult for individual businesses to tailor to a specific brand experience.
• What do customers have to do? Is there a base level of involvement that just says thanks? Uncomplicated, easy to understand and attractive to initially join. It makes sense to enable your customers to engage at a base level – and be seduced, and then rewarded, the more they buy from you. Charging customers a joining fee – even a small one like Just Jeans do – seems an unusual way to entice customers to engage.
• What is the reward experience? Do you control the reward offering? Does it reinforce your core proposition and bring customers back to you? Is it achievable? If the reward currency is controlled by another – like frequent flyer points – you have no control over a large component of the experience. Frequent flyer programs like Qantas have great pull and can deliver real customer value (when played right) but you have traded that for control of the brand experience. Just remember your best customers are now being rewarded by someone else’s… no seats available equals damage to your business.

Finally if you are contemplating following your competition into this space there is one question you have to be very clear on:

What does your brand stand for, and what part can loyalty play in that?

If you can’t answer that in a clear and compelling way – don’t start – you will be wasting your money and just feeding another shag on a rock!