The Trouble With Points Programs
Of the 200 or so major points-based programs currently being run, 30% will either be shut down or merged by the end of the year, according to Gartner analyst Adam Sarner.
But while some will be the victims of planned obsolescence, others will be discontinued because their goals weren’t necessarily thought through.
Most points programs fail when they offer commodities as rewards, Sarner said, speaking at Gartner’s spring CRM Summit in Chicago. For example, he added, airline frequent-flyer programs “have become a cost of doing business. If another airline comes along and buys all your points or miles and adds 100,000 points, and they get you to the gate on time 90% of the time while your carrier gets you there on time 70% of the time, a lot of people are going to take a look at that new program.”
Another danger is that without an integrated system, useful points data may not get out to the departments that can act on it.
So why not do away with the programs altogether? Sarner feels their place is as a promotional bridge between consumers and marketers. They can remain effective if the promotions are constantly changed to keep consumers interested.
He noted that points programs should not be confused with loyalty marketing. At best, they are a means of assembling customer purchasing data, which can then be used to build real CRM.
Once these consumers have offered their contact information and some basic purchasing data, the trick is to build a true loyalty program that incorporates customer-based segmentation with different strategies for each segment. A firm must also devise a progression of strategies that will change as the consumer matures.
