Sunday, November 11, 2012

Is launching a Loyalty program a Strategic move or Marketing?

This is the common expression which occurs when I asked the marketing managers or the decision makers in this domain.

What is the difference?.... is the next question I face from them.
Most of the companies in Middle East initiate a loyalty program because either they are following the loyalty band wagon or their marketing department has to come with “New initiative”.

This ambiguity in understanding the difference clearly reflects in their approach, when they hire an advertising agency to develop a loyalty program and far worse when they approach loyalty software and hardware vendor.

You must me thinking these are those small companies next door which you see operating a couple of stores,  but the matter of fact they are not whom I intend to talk about .

I am specifically talking about some of the leading organizations, banks and groups who are not short of resources.

The result is obviously a delivery of another frustrating loyalty program which the brand and the customer was better without.

A list of these loyalty programs like these can be quite extensive in this region. However my objective here is not to name and shame but to highlight the root of the problem which is the lack of strategic approach to this marketing element.

Customer loyalty should be a strategic approach evolving right from the bottom of the vision and mission of your company. Retailer should question why they are offering this loyalty program. It should be a part of mid to long term strategy of the organization to gain competitive edge in the market. 

Only when a strategic approach is adopted, the whole program dynamics takes a new dimension.

A classic example is the recent report by Strategy Analytics Wireless Device Lab on iPhone Owner Loyalty Declines: Is Apple Losing its Innovation Edge? which found that only 75 percent of iPhone owners in Western Europe say they are likely to buy their next phone from Apple, down from 88 percent in 2011. US repeat purchase intentions have also seen a slight decline, down from 93 percent in 2011 to 88 percent in 2012.

What does this mean to you?
Loyalty cannot be earned just by great marketing 


  1. Apple has always had a strategic approach when it comes to loyalty. They do great marketing too. Yet Apple is not able to retain their iphone customers, why? It could be because Apple has not been able to come up innovative with their new iphone lately which is an expectation from all their loyal customers.

  2. Yes that is right, This is a clear indicator that popularity of the product is not a measure of loyalty towards the product. There are various elements to measure loyalty for which a separate market research needs to be conducted to gather holistic data from both online and offline sources.This where most of the middle east companies fall short.