Tuesday, April 01, 2008

Rewards or Recognition- Is There a Choice?

We have been trained to think of loyalty programmes in tiers - silver, gold, platinum, etc. We always think of giving monetary rewards at the bottom-rung, and give privileges (recognition) as and when the customer climbs these tiers. The higher the tier, the higher the rewards and privileges.

This seems fine, till we start looking at the recipient of these rewards and recognition closely. Let's take an example - telecom. Here, the high users may be a mixed bag - he could be a businessman, a travelling salesman, a CEO, an insurance agent, a stationery supplier, a college student, or she could be a housewife - in short, just about everyone.

And the rewards one is likely to earn on their telecom bill is unlikely to be much (after all, 2-3% of a monthly bill of Rs.500 or more doesn't amount to much).

Now, some of these customers might already be on numerous loyalty programmes, while the others may be on none. Some of these customers might be on pre-paid, while the others might be on post-paid. Their social standings vary. Their self-image varies. Some of these customers might be monetary benefit-driven, while the others may be convenience-driven. In short, they are as diverse in their thinking or expectation as chalk and cheese. And mostly, the telecom companies do not have such detailed profile information to segregate these customers.

Another industry - Airlines. Here, mostly there will not be an aberration in the kind of people who fly some, and the kind of people who fly more. But then, there could be situations - like the on-board couriers in courier companies might fly more than their CEO. Now, the airline in its wisdom is giving gold or platinum benefits to the on-board courier, while the CEO might be languishing in their silver, or even worse, their red/blue rung.

And whether we are talking rewards, or talking recognition/privileges, both cost the marketer some monies (either you are parting with some percentage your earnings, or buying some privileges from other brands/marketers).

So, why do we as marketers insist on giving everything to everyone - just because he's climbed the tiers? Why don't we give the option to the customer to choose either the rewards or recognition (while there can be tiers even in these)? Why don't we let him decide what he would prefer and hence save some monies, by giving him what he's himself opted for? Why, for heaven's sake, we don't give him a chance to feel a little more involved (because, if I choose something, I have taken an involved/conscious call on what benefits I would like)?

It's time we as marketers started to consider this, because that's what true CEM (Customer Equity Management) is all about.


finding thyself said...

hi Ajay,

Good to see your post, almost over a year due!!!

I guess we all are part of some statistics or database. It seems like somebody is counting on us to do something all the time :)

N&P said...

I'm afraid I cannot agree on this one. To start with, let's start with the most talked about, but least practised, reason of running a loyalty programme: to know customers better, to turn them into business friends.

Now, if that was realised to some degree, the selection offered should improve in both the rewards and 'recognition' gestures (If you know I don't drink, you'd offer me juice). In turn, this should lead to efficiencies for the programme and goodwill from the customers. So it needed be a 'either-or' at all, but 'less-but-better'.

Second, I'd argue that the rewards and recognition have different though complimentary roles. Essentially, the rewards are inputs, paid by the company to the customer as a price of collecting (usually transaction) data: recognition is an output.

The company betters (customises) product by introducing add-ons (longer credit period, lower prices, free services, news you can use) while the customer gives the company 'preferred (though rarely 'sole') supplier status' by narrowing choice, increasing predictably and, almost as importantly, agreeing to take notice of marketing efforts.

The third point is that 'feel-good' gestures (separate check-in, access to lounge, invitation to consumers' forum, birthday cards) probably costs an intelligent company far less than the rewards that make these possible; yet the former are valued a great deal more by consumers. A test of that would be to take away a few of the privileges and see what happens.

My guess is that the reaction will be nothing less than what would greet a government that curtails, say, freedom of speech. I doubt if any loyalty programme would dare try an experiment like that, at any rate, not officially.

Now, let's come to the real world. How many programmes can you count that do a good job in recognising customers? How many times have you been impressed by a company's courtesy, kindness and friendliness – and been able to trace these to its loyalty programme? How many gestures triggered by loyalty programme data or device (that is, your card) has earned your goodwill? How often has your inbox or mailbox received database-driven news or offers that made you feel like thanking and congratulating a loyalty or CRM programme manager?

Fact is that recognition part of most programmes are nonexistent or terribly and cynically executed. This debate thereby becomes somewhat theoretical.

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