Sunday, 30 September 2012

Do loyalty points kill the relationship?

Pizza beer

A recent blog article on Harvard Business Review discussing the concept of the "gift economy" provided a great example that stopped me dead in my tracks.  It said:-

"To understand a gift economy, consider the example of moving into a new apartment.  When friends help you move, you express your appreciation by providing pizza and beer — really good pizza and beer. When you hire professional movers, you pay with money. Offer your friends money instead of pizza and beer, and they are likely to be offended. Offer to pay the movers in pizza and beer, and they won't unload the truck. Your friends are operating in a gift economy; the movers in a market economy."

Take a moment to think about that example and then think about some of your favourite loyalty programmes.

Would your loyalty programme be operating in the gift economy or the market economy?

In the HBR article, author Mark Bonchek goes on to point out how in the market economy the focus is on transactions.  You receive a service or product and hand over money in exchange.  Market economies are normally between strangers and the trust lies within the currency. This is reinforced by the the latin term for money which is "specie", literally meaning "payment in kind".  

Gift economies in contrast are much more focused on relationships and are typically between friends or close communities.  It's not about the value of the gift or the expectation of return, as Mark points out the purpose is "not to execute a transaction, but to express a relationship".

Loyalty programmes  normally look to operate in this space, creating an emotional connection with members and typically stating that the desire is to develop a relationship which transcends the basic transaction.  Tesco for example state on their website that the Clubcard loyalty programme is "our way of saying thank you for shopping with us"

Yet despite this, many loyalty programmes simply reward a purchase with a set number of corresponding points; it's a transaction - a payment in kind.

While this works well and the customer understands the principle, it is essentially an exchange between strangers.

Using the example listed at the start, imagine if every time you called a friend it was to ask for something and you then responded to their help with a payment in money.  It's not difficult to see that this relationship would very quickly end or turn into a supplier/customer one; and this is exactly what we do within a basic loyalty programme.

This doesn't mean however that we throw away traditional points recognition - it serves a purpose in both helping to establish the initial relationship and keeping a focus between the member and the brand on the "value" of the relationship.  We do however need to recognise its limitations in that it is a transactional relationship and like all transactions, customers will be free to make the next one with your competitor.  Loyalty points help to simplify decision making (all things being equal, I'll use the store with invested points value), create goal directed behaviour and form part of the price comparison - but they don't build relationships.

To develop a relationship in part requires the programme to operate within the gift economy.  The programme needs to be able to express the relationship and demonstrate a different kind of value, a different kind of currency.  The gift economy operates on a Social Currency and can be expressed simply as:-

  • Things that help me belong
  • Things that help me feel significant

If when designing a loyalty programme, we build in components which align to these requirements, the programme will start to operate in both the market and the gift economies and move from being purely transactional to being emotional.  Whether it's providing benefits, surprise and delight, badges and achievements, access to information or membership of clubs, there are many ways to augment the basic loyalty design to create a social currency that is not directly linked to monetary value.

There is nothing wrong with points and indeed these form a crucial part of recognition.  We simply need to make sure that if the aim is to create a loyalty programme and not simply an incentive programme then moving the interaction from being transactional to being emotional is important.

34 comments:

Hua Cai said...

cheap jordans, http://www.jordan-shoes.us.com
oakley sunglasses
fitflop shoes
asics, http://www.asicsisrael.com/
air max 90
designer handbags,handbags outlet,cheap handbags,purses and handbags,wholesale handbags,designer bags,bags outlet,handbags wholesale,cheap purses,discount handbags,handbags sale,wholesale purses,handbags and purses,designer purses
jordan shoes, http://www.jordan-shoes.us.com
air force one shoes
ray-ban sunglasses, http://www.rayban-sunglassess.us.com/
hollister clothing
supra footwear
michael kors factory online, http://www.michaelkorsfactoryoutletonline.com
custom mlb jerseys
ray ban sunglasses
ralph lauren outlet
burberry outlet,burberry outlet online,burberry outlet store,burberry factory outlet,burberry sale,burberry
michael kors outlet online, http://www.michaelkors-outlets.us.com
michael kors outlet online, http://www.michaelkorsoutletonlinstore.us.com
salvatore ferragamo
michael kors factory outlet, http://www.michaelkorsfactoryoutlets.in.net/
tory burch outlet online
seattle seahawks jerseys
valentino shoes
toms shoes
lebron james shoes
chicago bears jerseys
longchamp handbags, http://www.longchamphandbag.us.com/
oakley sunglasses
cheap nba jerseys, http://www.nbajerseys.us.com
chicago blackhawks jersey
2015910caihuali

mohit rao kumar said...
This comment has been removed by the author.
mohit rao kumar said...
This comment has been removed by the author.
mohit rao kumar said...
This comment has been removed by the author.
mohit rao kumar said...
This comment has been removed by the author.
Anonymous said...

michael kors outlet
montblanc pens
ferragamo shoes
tory burch outlet
dior outlet
true religion jeans
ray-ban sunglasses
michael kors outlet store
discount oakley sunglasses
hermes outlet
polo ralph lauren
kate spade handbags
ralph lauren outlet
true religion jeans
air max 90
swarovski crystal
ray ban sunglasses
true religion jeans outlet
rolex watches outlet
nike air max
ferragamo outlet
fitflops outlet sale
swarovski jewelry
beats headphones
iphone cases
ray ban sunglasses
longchamp handbags
reebok trainers
michael kors outlet
swarovski crystal
ray ban sunglasses
mont blanc pens
coach outlet
louis vuitton bags
prada handbags
20160514zhenhong

柯云 said...

2016-05-30keyun
kate spade outlet
lebron 12
ed hardy outlet
true religion outlet online
coach outlet
nike air force 1 shoes
nfl jerseys
fitflop clearance
celine handbags
nfl jerseys
fitflop shoes
louis vuitton outlet
air max 95
nike store uk
true religion outlet
adidas running shoes
michael kors outlet online sale
coach outlet online
gucci bags
coach outlet store online
air jordan 8
adidas yeezy
louis vuitton handbags
michael kors outlet online
coach outlet
michael kors outlet
ray ban sunglasses outlet
tory burch outlet
christian louboutin sale
longchamp outlet
rolex watches
ray ban sunglasses outlet
louboutin femme
christian louboutin outlet
cheap toms
michael kors canada outlet
ralph lauren outlet
toms shoes outlet online
louis vuitton outlet

xumeiqing said...

201606701meiqing
michael kors outlet online
air jordan uk
coach outlet online
stephen curry shoes
michael kors handbags outlet
fitflops sale clearance
ray ban sunglasses
prada outlet store
yeezy boost 350 balck
timberland outlet
louis vuitton outlet
louis vuitton factory outlet
cheap oakley sunglasses
michael kors outlet clearance
michael kors outlet clearance
air jordans
oakley sunglasses
louis vuitton outlet
nike huarache white
asics outlet
valentino shoes
nike roshe run women
michael kors outlet online
bottega veneta handbags
lacoste shoes
cheap jordans
true religion
kate spade outlet
ralph lauren pas cher
pandora charms
jordan shoes
kate spade outlet
reebok pump
converse uk

Gege Dai said...

jordan shoes
ed hardy clothing
nike outlet
ugg outlet
ugg outlet online
michael kors outlet online
ugg boots
cheap mlb jerseys
cheap replica watches
uggs clearance
instyler ionic styler
chaussure louboutin
michael kors uk
salomon shoes
cheap uggs
michael kors factory outlet
hollister uk
chaussure louboutin
kobe 9
ugg outlet
coach outlet clearance
nike store uk
cheap michael kors handbags
kate spade uk outlet
michael kors handbags
vans outlet
ralph lauren,polo ralph lauren,ralph lauren outlet,ralph lauren italia,ralph lauren sito ufficiale
fitflops sale clearance
mbt shoes outlet
cheap oakley sunglasses
michael kors outlet uk
nike free 5
michael kors outlet
oakley sunglasses
fred perry polo
0727jianxiang

dong dong23 said...

ray ban sunglasses outlet
ray ban sunglasses
giuseppe zanotti sneakers
louis vuitton
louis vuitton outlet stores
michael kors handbags
michael kors uk
christian louboutin outlet
michael kors handbags
michael kors outlet
jordans for sale
coach outlet online
cheap nfl jerseys
gucci handbags
supra sneakers
kate spade outlet
longchamp outlet
louis vuitton
louis vuitton outlet
oakley sunglasses
louis vuitton outlet
timberland boots
michael kors handbags
christian louboutin shoes
vans shoes outlet
coach outlet
ray ban sunglasses outlet
louis vuitton outlet
louis vuitton outlet
ray ban sunglasses
true religion jeans
retro jordans
cheap jordans
gucci outlet
cheap jordans
fitflops
nike roshe run
adidas outlet
michael kors purses
supra shoes
20168.9wengdongdong

Pengobatan Paling Efektif jantung Lemah said...

The information is very spectacular. Thank you for sharing the information :)

Pengobatan Anemia Atau Kurang Darah
Pengobatan Mata Katarak
Cara Herbal Mengobati Radang Amandel
Penanganan Tepat Penyakit Liver

Narender Godara said...

Packers and movers in jalandhar
Packers and movers in varanasi
Packers and movers in agra
Packers and movers in kanpur
Packers and movers in allahabad
Packers and movers in lucknow
Packers and movers in ludhiana
Packers and movers in mohali
Packers and movers in shimla
Packers and movers in jammu
Packers and movers in amritsar
Packers and movers in chandigarh

Narender Godara said...

Packers and movers chennai
Packers and movers coimbatore
Packers and movers dehradun
Packers and movers ahmedabad
Packers and movers chandigarh
Packers and movers allahabad
Packers and movers kanpur
Packers and movers lucknow
Packers and movers cochin
Packers and movers agra
Packers and movers varanasi
Packers and movers indore

Cara Menyembuhkan Kanker Pankreas said...

Utilizing natural ingredients from nature, can create a wide variety of herbal remedies that are very beneficial for health with natural ingredients authenticity

Pengobatan Kelenjar Getah Bening
Cara Mengangkat Kanker Payudara Tanpa Operasi
Cara Menghilangkan Bopeng Bekas Jerawat
Obat Liver Sampai Sembuh
Pengobatan Tipes Secara Herbal
Atasi Masalah Lambung

raybanoutlet001 said...

new england patriots jerseys
jordan shoes
chrome hearts
discount oakley sunglasses
oakley sunglasses wholesale
polo ralph lauren
jordan 4
detroit lions jerseys
true religion jeans
49ers jersey

Obat parkinson ampuh said...

thank you very useful information admin, and pardon me permission to share articles here may help :

Cara menyembuhkan tipes
Cara menyembuhkan polip rahim
Cara mengatasi tipes pada anak
Cara menurunkan sel darah putih berlebih
Obat darah putih naik
Perbedaan polip hidung dan sinusitis
Cara mengobati peradangan lambung

Toko Obat sekaligus Suplemen Herbal said...

Thank you very much for sharing this very useful information, I am very happy to have found this information that I have been looking for
Cara Mengempeskan Leher Bengkak
Obat Lecet Pada Vagina
Obat Ruam Popok
Obat Benjolan Di Ketiak
Obat Infeksi Kelenjar Bartholin

柯飞敏 said...

20180416xiaoke
canada goose jackets
ugg outlet
cheap oakley sunglasses
canada goose outlet
polo outlet
nfl jerseys wholesale
tory burch outlet online
uggs outlet
michael kors outlet clearance
ugg outlet

Walatra sehat wasir said...

thank you very useful information admin, and pardon me permission to share articles here may help :

Obat tukak lambung alami
Obat sirosis hati
Penyebab maag kronis dan cara mengatasinya

Fauzi said...

Thank you very much for sharing this very useful information, I am very happy to have found this information that I have been looking for
Cara Mengatasi Mata Merah
Walatra Jelly Gamat Original
Cara Mengobati Perut Melilit
Obat Eksim Pada Bayi
Toko Obat Herbal

jjjjjjjjjjjjj said...

longchamp longchamps
adidas crazy explosive
nike air max 90
longchamp
hermes handbags
Kanye West shoes
nike sneakers for men
moncler jacket
jordan 12
michael kors outlet

Fghkfhk Dfgaert said...

qzz0510
barcelona jersey
nike factory outlet
true religion jeans
ferragamo outlet
polo outlet
michael kors outlet
christian louboutin outlet
ugg boots
kate spade outlet
coach outlet online

FauziUzi said...

Thank you very much for sharing this very useful information, I am very happy to have found this information that I have been looking for
obat herbal paling mujarab mengatasi panu
cara mengatasi penyakit bronkitis hingga tuntas

Fahrezy agra said...

If you have a history of illness that is difficult to recover, maybe our next article will help you to recover

Cara menghilangkan psoriasis
Cara Mengatasi Batuk pada Ibu Hamil
Cara Mengobati Luka Bakar
Cara Menghilangkan Bisul
Obat G-Sea Jelly Gamat

Ahli Kesehatan said...

Thank you very much for sharing this very useful information, I am very happy to have found this information that I have been looking for
cara mengatasi & menghilangkan nyeri bahu
obat batuk berdarah alami
cara mengobati abses gigi secara alami
cara menghilangkan varises di kaki dan paha
cara mengobati penyakit gula basah
makanan untuk menurunkan kolesterol dan asam urat

dong dong23 said...

longchamp handbags
pandora charms
prada handbags
mikimoto jewelry
adidas ultra boost
nfl jerseys
coach outlet online
tiffany jewelry
nike shoes
shoe carnival
20187.13wengdongdong

Ayu Martina said...

thank you very useful information admin, and pardon me permission to share articles here may help :

Cara menyembuhkan demam scarlet
Obat lubang bekas jerawat
Obat penyakit dompo ampuh
Agen qnc jelly gamat bandung
Obat tulang retak
Obat hamil anggur ampuh
Walatra zedoril 7

SSSSSS said...

hyperdunks
gucci belt
golden goose superstar
nike air max 90
kobe 11
kobe 9
moncler jackets
bape clothing
nike flyknit trainer
cheap oakley sunglasses

dong dong23 said...

michael kors outlet
versace handbags
nike air
goyard handbags
jimmy choo
reebok
converse shoes
converse
pandora jewelry
parajumpers
2018.7.28chenlixiang

56 said...

0806jejeLe jeu Air soldes basket asics femme Max Quarter et Air Max Pure sont également asics gel noosa tri 9 w femme des baskets de basket-ball Nike qui asics gel nimbus 18 Chaussures offrent les fonctionnalités de grande qualité nike air max 90 jacquard femme pour lesquelles Nike est célèbre. Une nike air jordan 1 retro high og carmine personne que je n'étais jamais prêt asics gel lyte iii kakishibu tan tan à faire était de prendre des suppléments avis sur chaussures asics illégaux ou tout type d'hormone de croissance. nike roshe run noir cdiscount

Yaro Gabriel said...

www0908
longchamp
coach outlet
coach outlet factory
louboutin shoes
pandora outlet
clarks outlet
ray ban sunglasses
coach outlet
coach outlet
canada goose outlet

mesi saface said...

Thank you very useful information admin, and pardon me permission to share articles here may help :

Cara mengobati pembengkakan kelenjar air liur
Cara menyembuhkan infeksi usus
Cara mengobati disentri anak
Cara mengobati pengapuran tulang
Cara Mengobati Impetigo Bulosa Secara Alami
Cara mengobati sirosis hati

Pengobatan Alami Terbaik said...

Thank you very much for sharing this very useful information, I am very happy to have found the information I was looking for. Once again, thank you so much.
cara mengobati tumor parotis
cara mengatasi penyakit bronkitis
obat tradisional penyakit graves
cara mengatasi kepala kliyengan dan mual
7 makanan sehat untuk menurunkan kolesterol dan asam urat
obat tradisional abses payudara
pengobatan bidai tulang kering
cara menghilangkan benjolan seperti bisul di ketiak
cara mengobati pitted keratolysis
cara mengobati neuropati perifer

Juliana Kho said...

[url=http://www.youtube.com/]http://www.youtube.com/[/url]

http://www.youtube.com/

http://www.youtube.com/