About halfway into my consulting career, I wrote a blog explaining that loyalty programmes were not the biggest contributing factor when I was selecting a place to stay when away on business. I added that businesses who focus on ‘points and rewards’ at the expense of an excellent underlying customer experience are at risk of losing truly loyal customers.
Two years and a lot of travelling later the way I feel hasn’t changed too drastically, but I do value the points and rewards that are offered a lot more. I have been increasingly travelling around the world and therefore staying in an innumerable number of hotels, and so I feel that I am due “a little extra” back from the hotels.
Passing the burden onto customers
Loyalty rewards are often used to enhance the customer experience. Free gifts, invites to member-only events, unlocking special rewards and so on all do this, but what happens when a brand uses loyalty rewards to offset or excuse a poorer customer experience?
I came across this approach when I arrived at my hotel in Sweden this week. The concierge handed me a slip of paper and asked if I would like to earn 500 loyalty points for each day/night that I didn’t have housekeeping service my room.
The hotel was rewarding me for taking on the burden of having to make my own bed, hang up my towels to dry and generally make it ‘nice place’ to stay. I did some investigation, and it seems like this hotel chain has been offering this since the beginning of 2016, but only in a select number of hotels. I’ve been staying in this particular hotel on-and-off since September 2015, and this is the first time it’s been offered to me.
Is rewarding a poorer experience so uncommon?
I started to think about whether other brands had implemented similar initiatives to reward customers for taking on some of the ‘burden’ of the customer experience.
The first that came to mind was Tesco. Prior to the carrier bag charge coming into effect, customers would be rewarded with ‘Green Clubcard points’ whenever they reused their own bag, rather than taking a new plastic bag. The ‘burden’ to many customers would have been remembering to bring a reusable bag or to always have one handy in a backpack or in their car.
The rewards don’t have to be points-based, or even financial. Amazon Prime members (who will be accustomed to same- or next-day delivery) have the option of selecting free ‘no-rush delivery’, in return for a promotional credit towards a future purchase. The burden here is having to wait longer than you might ideally want in order to receive the items.
Self-service checkouts are arguably a way of passing the burden of completing the transaction onto the customers, as we have to contend with scanning barcodes, weighing fruit and vegetables and so on. The reward here is a faster and more frictionless (or interaction-less) experience, but as I explored in a previous blog, I’m not convinced that the ‘reward’ is worth the downgraded experience.
Passing the burden onto customers is acceptable assuming they have a choice, but also assumes that even the most basic of experiences will still ‘work’.
In the instance of Amazon or other retailers offering different delivery options, if the fundamental process of delivery and collection doesn’t work, whether or not the customer is rewarded for the delay is irrelevant.
A colleague of mine was recalling a story whereby a ‘click and collect’ store she had ordered a product to didn’t open when it was supposed to, and her delivery was, therefore, returned to the depot. In this example, not only has she taken on the burden of having to collect it (rather than have it delivered directly to her), but now she has the burden of arranging redelivery or an entirely new order.
In the case of the ‘skipped housekeeping’ rewards incentive, the basic amenities such as tea, coffee etc. weren’t suitable for the length of the stay. For example, providing just two mugs and teabags for a three- or four-night stay makes little sense, and will result in the customer having to go out of their way to sort it out, taking up staff time that could otherwise have been spent on more important tasks.
A necessary change in focus
On top of this, there’s an overall need for businesses to reconsider how they approach customer loyalty. In a 2013 survey, more than half of consumers admitted they had abandoned at least one loyalty program in the past year. Customers want more than just points and discounts and are become more aware of when brands are trying to ‘buy’ them with these transactional rewards.
In analysis carried out by Capgemini Consulting in December 2014, 44% of the negative sentiment towards loyalty programs was due to the lack of reward relevance, flexibility and value. And so, I have to give credit to the hotel brand for testing new ideas, but I do ask the question: at what cost to the customer experience is this done? Offer me a great customer experience, treat me like a person, and provide me with a service that makes me feel special. Then I’ll keep coming back.
Having thought about it more in order to write this blog, I have come to the same conclusion that I did over two years ago: no matter how you reward your customers, if the underlying customer experience is not up to the high standards that customers expect, nothing else matters.
Repeat customers will start to look elsewhere, new customers won’t stick around, and prospects won’t even bother turning up in the first place, especially if they have to make their own hotel bed in the process.