We have a problem. Are we loyal?

Let’s start all conversations about loyalty by defining the basics and understanding what kind of loyalty we are talking about.

Nope, we are not talking about true love, or Brand evangelism, which is absolutely rare. Assume you are not apple, with fans waiting long hours in front of your store to get their new phone, or assume you are not Harley Davidson, with fans tattooing your logo on their arms. We are talking about something more boring and fairly commonplace, which is however essential, if you want to stay in business.

This is about getting the minimum job done, namely generating recurring revenues from the same buyer. Any Brand should be able to do that and should want to do that. One of the most widespread tools to achieve this goal is what we call loyalty programs, where you can earn and spend points. It’s the case, for example, of Miles & More or any of your favorite grocery store’s points cards.

We have a problem, though.

It’s a very basic job, and still we are not doing it right. According to The Economist, 77% of all loyalty programs fail within 24 months from their launch (2019). The programs that last longer mainly and vastly benefit Brands only.

The reason is that today loyalty is a centralized, controlled relationship, with Brands holding the long side of the stick. Most loyalty programs are stand-alone schemes, where you earn and spend points against the same Brand. It’s basically feeling like in a lock-down.

How much trombones or cars should, or would you want to buy? You need to buy more of what you don’t want, paradoxically, if you want to consume all of your points. You won’t do it and Brands don’t want you to do it.

Since the variety of options in a stand-alone loyalty program is so low, fans are not really able to spend all of their points, which mostly remain unused. In 2019 that amounted to $500 Bill worth of unused points, which is almost as big as the GDP of Switzerland. Current loyalty schemes freeze value, instead of unlocking it. All in the name of a perceived Brand loyalty, which is and has always been a mere illusion: after the honeymoon period, loyalists will just stop buying you.

Truth is we can solve this issue, thanks to technology. There is no choice. Either you disrupt, or you will be disrupted. And that happens much faster than all of us expect.

Francesco Pagano

Experienced Marketing & Business Leader. Global profile, passionate about innovation, brand management, brand communication and international business. Always up for irresistible product concepts, ultimate communication integrated campaigns & great Italian food.

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