Opinion: Most loyalty programs use the wrong incentives

Opinion: Most loyalty programs use the wrong incentives
Tags: Consumer Behavior, Customer Experience, Customer Service, Department Stores, Loyalty Programs, Marketing, Multichannel Retailing, Online Retailing, Pharmacy/Drugstores, Point-of-Purchase / POP, Psychology, Retail - Apparel, Retail - Automotive, Retail - Convenience Stores, Retail - Electronics, Retail - General, Retail - Home Center, Retail - Mall, Retail - Warehouse, Shopper Marketing, Specialty Stores, Supermarkets & Grocery Stores, Technology
September 22, 2008

Wall Street Journal: The biggest problem with loyalty programs, according to two professors of management science, is that most retailers adopt a one-size-fits-all approach: They use monetary rewards to encourage repeat purchases. But product discounts won't change buying behavior in the long run in shoppers who value things like personalized service, convenience or shopping pleasure more. These types of consumers may change their behavior to access the price promotion, but they likely will revert back to their regular brands or buying habits shortly thereafter, resulting in, at best, a temporary change in sales and market share.

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