Sunday, 14 August 2016

The future of loyalty. (There is none).

Loyalty schemes- enjoy them while you can. Loyalty programmes are the product of the recent past- an age where computing was cheap but the Internet was rare.

Two coffee shops. These usually have the most basic form of loyalty scheme- the stamp card.

Twenty years ago (prior to chep computing) loyalty schemes were expensive to administer. They would take the form of green shield stamps that were both tiresome and had no market research value to the retailer.

In ten years time the current plastic cards will seem as primitive as the stamps. In fact there will be little customer loyalty as such because every consumer will enjoy price transparency on the Internet. Most people will make decisions in a far more rational way than at present.

Simplicity and value is the future. It is no accident that ALDI and Lidl crush their more costly supermarket rivals despite offering no loyalty scheme.

The real point of these loyalty schemes is not to save you money. It is a way to generate apparent value from nothing. Modern airlines know exactly how many tickets they have sold and they can predict which seats are likely to remain unsold. This allows them to issue a 'free' £200 ticket at very little real cost to themselves.

This is now changing. Why should an airline sell a flight to a supermarket loyalty scheme when they could simply sell the ticket at a reduced rate from their own website? Loyalty schemes can only create value from nothing when pricing is not transparent. Customers will no longer be impressed by 'free' £200 flights that may be bought direct from a discount airline for £10 or less.

Loyalty points are fun. We should enjoy them while we can but we should realise the points as quickly as possible.

No comments:

Post a Comment

I moderate the comments for spam but welcome contrary viewpoints.