Why earning loyalty isn’t just about earning points

Customer loyalty has become closely identified with the programs of points, coupons and discounts that fill our wallets with plastic cards. So much so, the debate over the future of these loyalty programs gets quite confused.

However, if you focus on earning loyalty, the debate becomes clearer.

Safeway’s Just For U approach combines customer data with technology to personalize the shopping experience.

For a start, loyalty programs do not in themselves make customers loyal. After all, Trader Joe's inspires tremendous loyalty and doesn't even have a program. Rather, loyalty depends on the customer experience, and if that's not creating value for customers then no amount of loyalty marketing will change it — at best, customers will be bribed to stay.

Loyalty programs are expensive to run, so it is certainly an option to abandon them and reinvest the money in improving the customer experience in some other way, in order to earn customer loyalty.

However, loyalty programs can also be more than just points and coupons, and be used to improve the customer experience. Starbucks for example has integrated payments and mobile technology with its program to make the coffee shop experience more enjoyable, while Sephora has taken a similar approach with its Beauty Insider program.

And of course Safeway's Just For U program has demonstrated how customer data together with technology can start really personalizing the shopping experience.

But whichever route you choose, there is a simple reality: In today's connected world, where opinions and experiences are so easily shared, earning customer loyalty needs to be left, right and center-stage for every business.

Loyalty programs can either be integrated to create a better customer experience, or abandoned in favor of improving the customer experience in some other way. Both are viable strategies.

Just don't confuse traditional points programs with earning customer loyalty.

What route are you taking? Tell us your strategy in the comments!

Simon Uwins is a former CMO of fresh&easy and Tesco UK, and author of Creating Loyal Brands (2014). Find him online at www.simonuwins.com.