Mon 27 Aug 2012
Faithful Acowlytes. I want to speak to you today about loyalty. Oh, no no no – not your loyalty dear friends. I would never call that into question. No, specifically, I’m talking about the mechanism that seems to have become an integral part of pretty much every consumer commodity transaction on the planet: the Loyalty Scheme – or Loyalty Scam, as I prefer to call it, because the concept is essentially a swindle. If you are voluntarily(i) taking part in a loyalty scheme of any kind, you’re being tricked.
I must confess, I didn’t really think much about this situation until fairly recently. As many people do, I just accepted the notion as a little extra perk that you got with your shopping experience and I dutifully had my various cards swiped, stamped or checked as I went about my shopping chores. And then, one day I had an interesting experience that threw some illumination on how retailers understand the concept of loyalty.
The incident in question involved a juice place in the local shopping centre. We’ll call it ‘Joos’. I would, on occasion, buy a juice from Joos as I was passing, and one day with my purchase I was given a little card. Apparently the object was to have it stamped each time I got a juice and then I would be rewarded after my tenth stamp with a free juice! How awesome is that! If you do the sums, that’s 10% off each juice I purchased. Well, I kept the card in my wallet (crammed at that time as it was with a dozen other Loyalty cards) and eventually, after a thirsty summer(ii) I had accrued ten juices and I went to collect on my free one.
“Oh, I’m sorry,” said the hip young Joos counter kid, “We don’t use that system anymore. Now we have a swipe card. Would you like one?”
“No,” said I, “I would like the free juice to which I’m entitled on account of my loyalty.”
“I can’t give you one – that system is out of date. You have to use the swipe card.”
“I see,” I said. “And when does the swipe card go out of date?”
The sarcasm was lost on her.
It got me to thinking. If Joos really cared about its customers – ALL its customers – why does it not simply mark its prices down by 10%? Surely these lower prices (at the usual Joos quality, of course) would be a big incentive to keep customers coming back to Joos! This is the sum effect of having all your customers in the loyalty scheme after all. The fact is, the reward system is nothing more than sleight of hand to make you think you’re getting value where there is none at all. Joos doesn’t care about their customers enough to pass on a substantial saving across the board, but is instead selling them the illusion that they are being faithful to the brand by making them go through a silly charade with a swipe card. They are, in effect, bribing you to be a customer. Wouldn’t it be something if customers were loyal simply because Joos was offering a great product at reasonable prices?
All loyalty/reward systems operate in the manner I’ve described above, to a greater or lesser extent. You need to keep in mind that the reduction in price conferred by these systems must be accounted for in the profit structure of the company offering them, anyway. The prices of a product have effectively been increased to offset any deficit that the reward scheme might have – in other words, the company doing the offering is selling an illusion that you’re getting a deal, when in fact they could offer you that ‘deal’ as a fairer price if they wanted to.(iii)(iv)
So here is what I want you to do, my intrepid Cowmpanions, when next you’re out shopping and someone offers you one of these ridiculous Loyalty cards. I want you to look that person straight in the eye and say:
“My dear Sir/Madam, if you want my loyalty, all you need provide is efficient, polite service and reasonable quality goods at sensible prices. If you do that, you won’t ever have to bribe me to come back to your store.“
- In some cases you have very little choice. Credit cards almost universally include loyalty schemes in the form of ‘reward’ points – you literally can’t not be involved in one. [↩]
- It’s not like I frequented this place often. It was an occasional stop on my shopping trips. [↩]
- There is also a level of scumminess that comes with the scamminess, as I’m sure you’ve encountered, where the ‘reward’ is somewhat underwhelming when you actually collect it. For example, my local vet sells a cat food dental product that I buy in 3 kilogram bags. “Do you want to be part of our loyalty scheme?” asked the vet assistant, when I bought my first one. “You get one free bag for every six you buy!” It sounded good, so I signed up. Imagine my disappointment when I reached the sixth bag and was given the free one – not, as I expected, a complimentary replacement for my usual 3k bag, but a miserly 500 gram one instead. Yes, technically ‘a free bag’ but really a grudging and tight-fisted swindle. Honestly, I don’t know how vendors can treat customers with this kind of contempt. [↩]
- Oh, and let’s not even start on Frequent Flyer points… [↩]