What You Need to Know About Customer Centric Loyalty

December 8, 2016
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For years, Air Miles was regarded as one of the best loyalty programs in the world.  As a coalition program, members were given tons of places to earn rewards and even more ways to redeem them.  This customer centric model satisfied both shoppers and merchants, illustrating a healthy two-way exchange of value at every point in the customer’s loyalty journey. 

 

All of this changed, however, when the program introduced a points expiration clause in 2011.  Since then, the program has come under fire as more and more customers began to question whether Air Miles truly had their best interests in mind.  This came to a head in July 2016 when disgruntled members began filing lawsuits, claiming unfair treatment as the expiration date loomed ever closer.  

 

 

On December 1, Air Miles once again changed their expiration policy…by retracting it.  The announcement came immediately before the vote on Bill 47, which was proposed by the Ontario government in order to make the expiration of loyalty rewards illegal.  Now, sitting on the other side of the vote, retailers are no longer able to impose expiration dates on rewards, and the Air Miles program has been restored to its original structure.

The Air Miles expiration adventure has raised a lot of concerns about loyalty strategies.  Consumers who benefited from rewards programs in the past are now wondering if these programs are actually valuable.  This mindset puts participation and engagement rates in a dangerous position, and calls for a reevaluation of what it means to offer a customer centric loyalty program.  

customer centric loyalty what does it mean

All of this makes Air Miles the perfect catalyst for discussing what it means to truly design a loyalty program around your customers.

 

 

Defining Customer Centric Loyalty

Customer centric marketing involves analyzing customer behavior in order to build brand loyalty.  This places the customer at the core of a business, and pushes brands to develop experiences based on the customer’s goals and motivations.  

When it comes to building a customer centric loyalty program, there are seven “pillars” to be considered:

customer centric loyalty pillar roundup

Addressing each of these concerns places the customer’s best interests at the heart of the program, delivering world-class experiences with every purchase.

 

 

Evaluating Air Miles for Customer Centric Loyalty

So how did Air Miles use (or not use) these tools?  Is the customer outrage truly warranted?  Using these pillars as a guide, let’s examine the Air Miles program and see if their business practices are customer centric.

1. Experience

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A customer centric experience is typically measured in terms of ease of use, convenience, and whether it’s enjoyable.

customer centric loyalty air miles measure up title

Air Miles is extremely convenient to participate in.  Members are able to rack up points virtually everywhere they shop, making earning rewards both easy and enjoyable.  This makes value easy to see and even easier to anticipate, prompting millions of people to join.

customer centric loyalty ways to earn

The introduction of expiration dates several impacted the enjoyable component of the customer experience by imposing new pressure and stress upon customers.  Before the changes, customers were free to earn explore reward options without fear that they’ll be taken away.  Imposing a time limit added one more roadblock that made the program feel more like a hassle than a benefit.

These actions made points redemption extremely difficult, sucking the enjoyment out of the best part of any rewards program.  Initiating changes that cause this level of dissatisfaction completely opposes customer centric loyalty, leaving Air Miles with a customer experience that discourages rather than delights customers.

customer centric loyalty experience fail

2. Loyalty

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Consistently recognizing customers in relevant ways creates meaningful customer centric experiences that encourage brand loyalty.

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The original intent of the Air Miles program was to give customers the opportunity to earn “Dream Rewards”.  This promise conjured ideas of luxury and fantasy that motivated customers to participate in order to earn experiences that they couldn’t afford otherwise.

customer centric loyalty dream rewards

Introducing an expiration date diminished this dream by making it nearly impossible to achieve.  With significantly less time to earn Miles, customers were forced to settle for lesser rewards that didn’t align with their original reasons for signing up.  Customers felt that they were being rushed to make hasty decisions just so that their rewards wouldn’t go to waste.  

To make matters worse, many customers redeemed rewards for products they didn’t want only to find out the expiration clause was no longer in effect.  Reneging the expiration date left many customers feeling cheated and abused, prompting them to distrust the validity of the program.  The fact that loyal Air Miles members feel like victims clearly indicates that there is an imbalance in the program’s customer centric modelling.

customer centric loyalty loyalty fail

3. Communication

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Personalization, clarity, and consistency are key to effective communications that improve a customer’s experience with a brand.

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Radio silence has been a significant issue over the course of the Air Miles expiry dilemma.  When the expiry announcement was made in 2011, there was little to no communication delivered to program members about the changes.  

This trend continued throughout 2016, as Air Miles quietly continued to change their loyalty program policies.  With no announcements on the official Air Miles website or emails sent to members, customers were required to ask for expiry information.  To top it all off, customers only received an email explaining that expiry dates were revoked more than a week after the fact!  

customer centric loyalty FAQ page

Considering how fiercely customers responded, this is an extremely poor example of customer centric loyalty practices.  By burying these types of communications in the FAQ section, Air Miles created an unintuitive relay of information that feels sneaky and underhanded.  These actions continue to decrease a customer’s desire to participate, rendering any communication efforts useless.

customer centric loyalty communications fail

4. Assortment

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In a customer centric loyalty program, assortment is as simple as it sounds: providing a wide variety of relevant rewards that add value to a customer’s experience with the brand.

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Air Miles was set up to appeal to everyone.  Being a loyalty coalition allows them to work with merchants in many different industries, and their rewards have been modelled to match.  Customers are able to earn cash, travel, and merchandise rewards, or be entered into sweepstakes and attend events.  

With this broad of a rewards menu, it’s impossible to accuse the Air Miles program of being narrow…at least on the surface.  Initially it looked like Air Miles has something for everyone, but as customers attempted to redeem their rewards before the looming expiration date many of them ran into huge complications.  Customers reported either being shown rewards they couldn’t afford, or not being shown rewards they had seen previously.  

customer centric loyalty shady game

Even though the rewards selection has since been corrected, the fallout has been noticeable as customers are demanding refunds for their less-than-ideal rewards and aren’t receiving them.  In this situation, customer centric practices would demand that Air Miles apologize and rectify the error to ensure the best customer experience possible, but this has yet to happen.  

So although their rewards selection meets the assortment criteria, they’re still a far cry from offering a consistent variety of rewards.

customer centric loyalty assortment fail

5. Promotions

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Successful promotions take the products and services that matter the most to customers into consideration.  A customer centric approach would ensure that every promotion is appealing and relevant to a wide demographic of consumers.

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Throughout the entire expiry debacle, Air Miles has continued to work with the same affiliated brands that members have come to know and trust.  Through these relationships, Air Miles has still offered beneficial bonuses and exciting ways to earn rewards.  Their home page is constantly boasting deals from a wide range of retailers, and encourages customers to picture themselves benefiting from each promotion.

customer centric loyalty promotions

This promotional catalogue shows that Air Miles is still upholding some customer centric practices by consistently offering appealing promotions – regardless of what customers think of the program as a whole.

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6. Price

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Offering products and services at a price that aligns with what customers think is fair is fundamental to building a customer centric loyalty program.

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This consideration is interesting.  In this case, Air Miles isn’t really offering customers products but they are selling a lifestyle and an idea.  As mentioned earlier, the brands they’re associated with operate at a wide range of price points, making the program accessible and feasible for everyone.  In addition, the Air Miles program is completely free to join, eliminating concerns that customers may have with pay-to-join programs.

customer centric loyalty free air miles

This accessibility is acknowledged and appreciated by customers.  No matter how they feel they’ve been treated throughout the expiry debate, Air Miles customers joined the program because they saw it as being beneficial in their day to day life.  Nothing about this component of the program’s accessibility has been disrupted, demonstrating a strong commitment to this customer centric value.

customer centric loyalty price pass

7. Feedback

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A loyalty program should always be built on customer feedback.  Hearing and recognizing concerns allows brands to establish the emotional connection that lies at the heart of customer centric marketing.

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This is most definitely the weakest element of the Air Miles rewards program.  As soon as the initial expiry announcement was made almost six years ago, customer feedback came pouring out as members tried to understand the program’s changes and how it would affect their membership.  

 

 

However, throughout the entire expiration ordeal, Air Miles remained silent.  From July to December, customers continued to express their concerns without any word from the program’s organizers.  This inattention led to severe escalations that were widely publicized.

Even once the expiration policy was removed, Air Miles refused to acknowledge their customer’s feedback.  When customers navigate to the expiration page on their website, it simply states that the program’s policy was recalled due to the changing provincial legislation.  

customer centric loyalty expiry FAQ

By effectively eliminating customers from the conversation, Air Miles painted a picture of themselves as a demotivating and insensitive company with only their best interests in mind.  This completely opposes customer centric practices which, as we know, always puts the customer’s needs first.  If it wants to even stand a chance of surviving, a loyalty program must meet and acknowledge the customer’s needs above all else – no matter the cost.

customer centric loyalty feedback fail

 

Measuring Customer Centric Loyalty

From this analysis, it’s clear that the Air Miles rewards program falls short of upholding customer centric practices.  Offering great promotions and free membership is not enough to excuse the complete lack of consideration for the overall customer experience and the necessity for clear, consistent two-way communication.  Above all else, a customer should always feel like their voice is being heard.

In light of recent events, many customers have sworn off the Air Miles program forever.  In their eyes, the experience was so poor that there’s nothing Air Miles can do to regain their loyalty.  Customer churn, then, is the ultimate measure of success for customer centric programs.  When churn rates start to climb, it’s clear that things need to change – and fast.

customer centric loyalty customer churn

So is it possible for these lost customers to be brought back to the fold?  As Air Miles attempts to rebuild its reputation and loyalty program, there’s only one thing the rest of the loyalty world can do: wait and see.