Issue #30: The Dirty 30

A few issues back I wrote conference confessions—my wishlist for industry events. One wish was “less panels, more debates”. That wish will be reality as I’ll be moderating a debate 🥊 at The BIG Handshake Loyalty in Chicago on November 10th. Get your tickets, and see you there!

🥇 Top-clicked link in Issue #29: Atmos Rewards new Communities benefits. Very cool, worth checking out.

In this Issue:

#1 Raising the requirements bar while lowering the reward. Look no further than United increasing (again) the 1K requirement while the benefits at this tier got worse.

#2 Adding tiers. “I’d love more tiers” said no member ever. Customers are on to us that it’s just devaluation in (bad) disguise.

#3 The more you shop, the worse your deal. Brands promote their “personalized offers” as a big flex that customers are getting the deal that’s juuuuuust right. But go dark for a while, and a good promo will end up in your inbox as a “winback.” Loyal? Here’s 10% off. Ghosted us? Here’s 40%.

#4 “Exclusive access” benefits so exclusive, you can’t get in. Experiential benefits are all the rage and very cool, but brands market to millions what only about a dozen can experience. It’s less benefit, more raffle, as this Taco Bell example calls out.

#5 Nothing’s more lucrative than trying to cancel. This applies to cobrand and membership programs. The customers threatening to cancel are getting more than those truly loyal who are sticking around.

#6 ‘Free’ is not free. The “free” reward comes with taxes, shipping, surcharges, blackout dates and a minimum purchase. If the customer has to pay to redeem it, stop calling it free.

#7 Partnerships are advertising for the brand, not value for the members. Now, not all partnerships are bad. But many are. We force customers to link accounts, remember rules, and hit thresholds just to earn 70 cents worth of hotel points for a week’s worth of coffee.

#8 We’ve taken the deal everyone used to get and called it a “member benefit.” Same 20% off that used to be printed on the receipt, now behind an app download and an account. Nothing got richer.

#9 Points are on loan to the customer and can be due at any time. When the economics start to teeter even slightly, the CFO comes to collect, via forced expiration and fine-print changes.

#10 We want members engaged, just not that engaged. We market points like they’re worth optimizing, then call the people who actually optimize them abusers (see: this recent WSJ article). Most program economics depend on members not reading the fine print, not using the benefits all that much, and not stacking the deals.

#11 The members are dead. That high member count you’re celebrating (looking at you, Marriott, and your 295M) has a big chunk that isn’t real: dormant, no activity, and some have an obituary.

#12 Percentage of sales from members is not engagement. If 95% of your sales are from members, it means you’re successful at adding a loyalty # to transactions with no friction. That’s not loyalty. That’s a checkout step.

#13 Cobrand customers are not your best customers. Cobrand customers are the most profitable, but only because of the bank’s point purchases. They often don’t fly, stay, visit, or transact like the true top cohort of engaged customers.

#14 Safe and boring beats different but risky (at least in the boardroom). In a world where everyone has an opinion on LinkedIn, blogs, Reddit and….newsletters 🫥 , marketers are afraid and forced to the safe and boring side. Heck, even Southwest is changing tier names to copy every other airline.

#15 Everyone reads the vendor rankings. No one believes them.
The biggest providers land in the top corner, and everyone rolls their eyes at it. And the rankings rarely ask the questions brands actually care about: price, value for money, or what happens after the contract is signed.

#16 You can’t loyalty program around a bad product. When sales slump, loyalty is looked to like a magic wand that can turn it around. In reality, the product needs fixing. Loyalty rewards love. It can’t manufacture it.

#17 The brand doesn’t need a program. Not every brand is a fit for a loyalty program, yet the pressure is real to produce one universally. See: Airbnb.

#18 The program ROI is very fuzzy. Most brands have no idea if their program is really driving enough incremental sales to cover the rewards and the cost of the platform. And most of them would rather not find out.

#19 You’re worried about getting pigeonholed in loyalty. Those who work in loyalty love working in loyalty, but worry they’ll be perceived narrowly and that it could hurt their chances of moving up.

#20 Everyone thinks being a loyalty member makes them a loyalty expert. Being a user is not the same as being a practitioner, yet opinions and advice come from your siblings, parents, coworkers, and members in a steady, endless stream.

#21 The B2B provider: “It’s on our enhancement pipeline” means It’s nowhere on the pipeline. They’ll say anything to close a deal. Require a deliverable date in your contract, or financial penalties for missing it.

#22 The program update email: “We’re simplifying our program” means We’re taking things away. “Simpler” almost never means richer. It means fewer benefits and fewer ways to redeem, packaged in a pretty font.

#23 The fine print: “Based on availability” means LOL, good luck finding availability. No further explanation needed.

#24 The earnings call: “customer point redemption volumes far exceeded our initial projections” means We forgot to include finance in the meetings. Keep your friends close, but your loyalty finance team closer. Model for every scenario.

#25 Almost all US airline CEOs: “We’re a premium product” means We have premium prices. Airlines think a nicer first class and a cobrand with a high annual fee makes them premium. It doesn’t. If Walmart started selling Fendi in a corner, they’d still be Walmart.

#26 The press release: “We listened to customers” means We read some Instagram comments and skimmed Reddit. Robust research is one of those things getting cut in most budgets. Program changes are heavily influenced by the economics, not by customers.

#27 The Corporate Affairs leader: “We price products, not people” means We price products based on data from (loyalty) people. Walmart may mean it. But across the industry, loyalty data is increasingly in the pricing conversation, and rarely in the customer’s favor.

#28 The Starbucks CEO: “You don’t have to make the rewards program a coupon book” means Customers treat us like a coupon book. No one wants their program to be labeled a discount machine, but consumers keep telling us they want a discount machine.

#29 The CEO: “We should have a cobrand card, or a retail media network” means We think we can monetize our loyalty members for easy money. Can these be lucrative? Yes, but only in the right industries. Outside travel, cobrand economics can be hard to make work (on the bank side and on the brand side), and most RMNs making serious money are Amazon, Walmart, Home Depot and a few others.

#30 Everyone: “We are using AI in our program….” means AI is helping me build PowerPoints. ‘Nuff said on this one.