Published by:
Harvard Business Publishing
Length: 8 pages
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Abstract
Although reviled in the business press as short-term fads, rewards programs are gaining popularity. Rewards can and do build customer loyalty. Unfortunately, they are widely misunderstood and often misapplied. A rewards program needs to share value in proportion to the value the customer loyalty creates for the company. A company must first make sure that its rewards align with company capabilities, then take into account the five elements that determine value to a customer: cash value, choice, aspirational value, relevance, and convenience. Any company can attain access to the full set of capabilities. Some businesses choose to band together with others in a rewards network. The authors detail the ways American Express, General Motors, State Farm, Neiman Marcus, Saks Fifth Avenue, MCI, Air Miles, and others are building customer loyalty.
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Abstract
Although reviled in the business press as short-term fads, rewards programs are gaining popularity. Rewards can and do build customer loyalty. Unfortunately, they are widely misunderstood and often misapplied. A rewards program needs to share value in proportion to the value the customer loyalty creates for the company. A company must first make sure that its rewards align with company capabilities, then take into account the five elements that determine value to a customer: cash value, choice, aspirational value, relevance, and convenience. Any company can attain access to the full set of capabilities. Some businesses choose to band together with others in a rewards network. The authors detail the ways American Express, General Motors, State Farm, Neiman Marcus, Saks Fifth Avenue, MCI, Air Miles, and others are building customer loyalty.