Charging Your Customer for Loyalty

Loyal Customers

Companies covet customer loyalty.  They understand the benefit of having loyal customers.  Statistics show, over and over again, the financial advantages of customer loyalty versus the continuous quest for new customers.  So how do some companies achieve customer loyalty?

1. The company creates a loyalty program that tracks its customers’ purchases and rewards customers for their repeat business.  For example, airlines give their loyal passengers early boarding privileges, free upgrades and points toward free trips.  Or a sandwich restaurant that gives the customer a free sandwich on their tenth visit.
2. And some companies build relationships and deliver a level of customer service that is so good that their customers wouldn’t consider going anywhere else.  Personally, this is my favorite.
3. Then there is a third way. The customer pays the company for the privilege of being a part of their loyalty program. What a concept!  Seriously, this is powerful, if not interesting.

AMC Theatres loyalty program, called AMC Stubs, charges their customers $12 a year to be a member.  That’s just $1 per month.  What do customers get for that?  AMC waives fees for online movie ticket purchases, credits the customer $10 for every $100 spent and gives free upgrades to larger popcorn and drinks.  So, if you are a customer who paid to be part of the loyalty program, why would you waste your money and do business with any other movie theatre?  Most people wouldn’t.

Then there is my favorite, the Amazon.com Prime program.  Amazon actually refers to this as a membership program, but many of their customers, along with industry experts, consider this to be a loyalty program.  For an annual fee of $79, the customer gets free two-day shipping, free movie streaming and Kindle book rentals.  There’s no tracking of how much business the customer does with Amazon.  The benefit is the same for the customer who buys one $10.00 book as for the customer who spends thousands of dollars on merchandise.  So, how can this really be considered a loyalty program?

My take on it is that the customer spends enough money on the program that they will think twice before doing business with one of their competitors.  The customer may even look for reasons to do business with Amazon, just to take advantage of the membership fee.

And, here may be the most important part.  To get customers to pay this fee, Amazon has to do two things so well, that the customer views the $79 fee to be a bargain.  First, they are amazing retailers and sell what customers want.  Second, they deliver amazing customer service. That’s a winning combination.

So, here are two questions for you to consider:

Is your company so good that your customers would be willing to be loyal to you with or without the incentive of a customer loyalty program – or even be willing to pay to be a part of a loyalty program?

If the answer is “Yes,” you are in some amazing company.

Shep Hyken is a customer service/CX expert, award-winning keynote speaker, and New York Times bestselling author. Learn more about Shep’s customer service and customer experience keynote speeches and his customer service training workshops at www.Hyken.com. Connect with Shep on LinkedIn.
(Copyright ©MMXIII, Shep Hyken)