Lessons of Loyalty and Customer Experience...

Customer loyalty. It's so often associated with the programs of points, coupons and discounts that fill our wallets with plastic cards. 

Yet the recently announced merger of Safeway with Albertsons has thrown together two very different approaches.

On the one hand, Albertsons caused a stir last year when it abandoned its traditional loyalty program, in order to invest in pricing and service. On the other hand, Safeway's digital Just For U program has been lauded for ushering in an era of personalization.

Both approaches reveal some important lessons about loyalty and experience.

For a start, loyalty programs do not in themselves make customers loyal. After all, Trader Joe's inspires tremendous loyalty and doesn't even have a program. Rather, loyalty depends on the customer experience, and if that's not creating value for customers then no amount of loyalty marketing will change it - at best, customers will be bribed to stay. In Albertsons case, it clearly recognized that it needed to get the experience right.

   (The Push and Pull of Customer Experience…)

However, loyalty programs can also be more than just points and coupons - the customer data that such programs generate can be used to improve the customer experience. Starbucks for example has integrated payments and mobile technology with its program to make the coffee shop experience more enjoyable. 

And Safeway's Just For U program has demonstrated how customer data together with technology can start personalizing the shopping experience. It uses purchase history not only to provide special deals on those products that an individual customer buys regularly, but also to highlight the promotions and manufacturer coupons most likely to be of interest. I've heard customers extolling its virtues. 

But which ever approach the merged Safeway/Albertsons eventually takes, there is a fundamental underlying lesson. In today's connected world, where opinions and experiences are so easily shared, earning customer loyalty needs to be left, right and center-stage for every brand. 

   (The Rising Value of Loyalty in a Disrupted World…)

Loyalty programs can either be integrated with the brand to create a better customer experience, or abandoned in favor of improving the customer experience in some other way. Both are viable strategies.

Just don't confuse traditional points programs with earning customer loyalty...