Last night, I went to see a talk by Stephen Butscher of Simon Kutcher & Partners talk about loyalty schemes. I’ve been interested in this since the adliterate post on the basis of loyalty (little love lost for loyalty schemes, there) and wanted to see if anything would change my mind.
Simon made a point halfway through the presentation, which I think formed the centre of the talk for me; he spoke about exclusivity inflation. You used to be in a scheme where you started at “bronze” status, then moved up to “gold” via silver. Now, you start at “silver” status and work up to “platinum” via “gold”, and there’s every reason to believe that the next logical progression is going to be “gold”, “platinum” then “black”.
This was made as an almost offhand comment, but it matters to the point of the whole talk and, I think, to adliterate’s point – that so often, all these schemes offer is an illusion of exclusivity without any tangible benefits to either the customer or the company. The example of a loyalty scheme that actually does offer benefits is Porsche’s. As well as the usual raft of semi-benefits, semi-irritations (newsletter, I’m looking at you) they also offer a “Park and Wash” service with Avis. If you need to park your Porsche at an airport, you don’t need to worry about getting a parking space, or the general public getting their mucky paws on it, or seagull faeces eroding it while you’re away; you park in Avis space, and they wash it for you before you get back.
There’s obviously a lot that Porsche can do that other brands can’t. But there’s also a lot to learn from this example in more abstract terms. Firstly, it’s a benefit that’s totally based in the product – you need a car, to need airport parking. But it also solves a problem that is not really solved by the original product; sure, the car gets you to the airport, but what happens once it’s there?
I always want to see more marketing that solves problems, and liked the idea that a loyalty scheme could solve more problems than the fake “I have to pay for ten out of ten coffees rather than nine out of ten” kind of problem. I certainly don’t believe that every product introduces a problem that can be solved by further marketing; but Monday’s talk was a good introduction to how these problems can be solved at all.
4 responses so far ↓
1 Infovore » links for 2008-04-30 // May 1, 2008 at 12:33 am
[…] Loyalty inflation | A Better Course “I always want to see more marketing that solves problems, and liked the idea that a loyalty scheme could solve more problems than the fake “I have to pay for ten out of ten coffees rather than nine out of ten” kind of problem.” (tags: loyalty brand branding marketing premium product design) […]
2 Dan // May 1, 2008 at 1:20 pm
I’m always interested in what one does after the gold card becomes a sign of middle management rather than status – obviously, cards regularly issued for expenses suffer in particular from this, although Amex in particular has tried to keep some brand cachet for its green card. Does one go for platinum? Titanium? Urbium?
The American Express Centurion card is an interesting one here, because it appears to be an attempt to capitalise on a desirable item that never actually existed – a black credit card that allowed one to buy anything you wanted. Lots of people had friends who told stories about seeing one, or ringing up a huge purchase on one, but in fact it seemed to be based on sightings of a black information card held by high-value Amex users effectively telling the person being offered the platinum card that the holder’s charging behaviour would resemble that of a card fraudster, and not to worry too much about that. After the urban myths create the market for the mysterious invitation-only credit card, it is created, and is now being commodified – you apply for the card now rather than being invited to receive it. I sort of miss the mythic version, personally, which allowed you to do anything. Although this one comes with a card that lets you into first-class lounges anywhere in the world, which is a sensible loyalty benefit in terms of the intended user base comparable with the Porsche/Avis hook-up.
So, for Amex the gold-platinum-black progression already exists. For that matter, First Direct and HSBC Premium both offer dark-toned cards (plain black and patterned black and navy) to distinguish them from the grey tones of the standard HSBC accounts, although these are much meaner sorts of wealth.
3 Lars Plougmann // May 5, 2008 at 9:03 pm
It is interesting how many of the “exclusive” offers depend on perception (silver is valuable, gold more so, black is mysterious) rather than definitions.
I worked with an airline that put firm definitions around their top tier loyalty scheme: You would be eligible for Pandemonium membership if you were one of the airline’s top 5,000 passengers the previous year. If you dropped out of the top 5,000 one year you dropped out of the club.
I don’t know what happened to the Pandemonium status and if the airline fell victim to loyalty inflation or if they stuck to the 5,000 only rule while managing the inflation with their more widely known loyalty programmes.
4 Alexandra Mitchell // May 5, 2008 at 9:24 pm
You would be eligible for Pandemonium membership if you were one of the airline’s top 5,000 passengers the previous year.
I’d be interested to know how clear the airline made this to their ‘Pandemonium’ customers – one of the points Stephen made was that there must be some kind of incentive to stay in the scheme, whether that meant that people had to pay to be a part of it, or people had to maintain patterns of behaviour to be a part of it. Otherwise your scheme turns into yet another card in someone’s wallet.
Speaking of which (Dan) one thing that credit or bank cards have a massive advantage in in this area is that they are already cards. So if -as the black Amex does -you also offer advantages other than credit, the card and scheme that comes with it are going to be easily accessible to your customers, because the means by which they are used are already in their wallet.