Mixing rewards and incentives eat away at brand loyalty

Deitch PharmacyThis morning I walked into my usual pharmacy to refill an allergy prescription, and there was a sign inviting new customers who transfer their prescriptions over to this store the offer of half-price on any new prescription and a $100 gift certificate for store use. What about me? I have been having my prescriptions filled here for years, and spend $25 each month on my deductible. I also purchase everything from tissues to sunscreen lotions. Granted, there is a rewards program, but my usual discount is $1.50, and I have to use it within a few weeks otherwise the offer expires.

Incentives for new customers are commonly very aggressively marketed; more than “rewards” or “discounts” for current customers. If we use the accepted premise that it is much easier and much more lucrative to keep established customers coming back, why is there so much attention paid to new customers?

This isn’t just an isolated case either. I have noticed similar introductory campaigns for cellphone companies, cable companies, credit card balance transfers, and even local department stores. I was purchasing shirts for my son at Gap last week, and the cashier asked me if I wanted to open a Gap credit card. If I did, I would be entitled to an immediate 20% discount off of my first purchase. Now as an established customer of Gap who commonly spends hundreds of dollars on casual wear for my family, but instead uses American Express as my chosen credit card, why isn’t the store rewarding my consistent spending? It was the same at Anne Taylor’s, Victoria’s Secret, and The Limited. If I opened up credit cards at all of these stores, I could have benefited from a 20% discount on my initial purchase, but by the end of the year and at this pace, I would need a shopping cart to carry around all of these credit cards; not to mention the length of my credit report and the adverse affect of so many new accounts on my credit report.

Does all of this aggressive marketing alienate customers like me, when in fact I am not being rewarded for my spending? I want to be recognized as special too. I think companies need to see the difference based on a consumer’s purchasing power. By rewarding good customers, it will keep us coming back. I want cash rebates, lower interest rates, and discounts commensurate with new customer incentives.

All of this even gives cause to think about home mortgages. Here are banks giving huge financial breaks and discounts to help people, including many homeowners who overspent in the height of the economy and used the equity in their homes as ATM machines, now being offered tremendous incentives to prevent foreclosures, so why hasn’t there been any rewards for good customers who have never missed a payment and still pay 6.5%?

Companies need to rethink their reward and incentive programs, and rebuild brand loyalty. They need to motivate good customers to stay with them; instead of running off to the next pharmacy next month in order to benefit from that attractive offer of a $100 gift certificate.

photo credit: David Hilowitz

One Response to “Mixing rewards and incentives eat away at brand loyalty”

  1. Tell your best customers that they are worth less than your newest ones said:

    Nov 01, 10 at 10:02 am

    […] Cheryl at the Service Untitled blog shares a story we’ve all experienced: This morning I walked into my usual pharmacy to refill an allergy prescription, and there was a sign inviting new customers who transfer their prescriptions over to this store the offer of half-price on any new prescription and a $100 gift certificate for store use. What about me? I have been having my prescriptions filled here for years, and spend $25 each month on my deductible. […]