6 reasons why customer loyalty programs don’t work

“1) Loyalty programs are based on discounts, which ‘train’ existing customers to expect low prices and wait out normal prices, 2) They attract loyal customers who would happily pay a premium, 3) they discourage new customers by making them feel punished or excluded, 4) they encourage competitors to retaliate with me-too programs, 5) they reduce profit margins, which 6) reduces the company’s ability to serve customers at formerly high levels.

The truth is, loyalty can’t be programmed. As soon as customers begin to feel ‘stalked,’ they choose ‘fight’ or ‘flight.’ They either figure out how to game the system, or else they run to another brand.”

via Zag (page 100)