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From the Editor's Desk
Framing Reward is as Important as Reward Itself
On May 1, 1981, American Airlines launched its frequent flyer program AAdvantage. Since then, a flood of loyalty programs have attempted to bring customers back through rewards.
Today, you can become a card-carrying member of just about anything: hotels, supermarkets, drugstores and pizza chains. If you're in a store, chances are someone will ask, "Would you like to join our rewards program?"
Marketing professors, store managers and executives are still not sure how effective these initiatives are. One puzzle is the link between participation and loyalty. It's not that strong. Millions of Americans are enrolled in at least one loyalty program, but just a fraction of them are dedicated customers. Typically, loyalty programs work only to the extent that they reward customers who are already loyal.
Another part of the mystery is the reward itself. Most loyalty programs offer additional perks to create a positive feedback loop - the more we shop in one store, the more we get in return, the less we'll shop in another store. But in a world saturated with offers, it's difficult to turn a reward into a habit.
Here's one idea. Instead of asking, "What rewards should we give away?" ask "How should we give away a reward?" It might not be the reward per se, but how the reward is framed, and the steps customers must take to obtain the reward, that matters.
Continued here
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