The Limits of Customer Rewards: A Support Story Part 1

TeleworkPH
Published: October 31, 2023

Ever found yourself lured by those glitzy “Earn Points Now” signs or exclusive member-only deals? You’re not alone. The business landscape is awash with customer rewards, seducing us into believing that a free coffee or a discounted second purchase is the endgame of a rewarding customer relationship. Think again.

Now, this isn’t a takedown of customer rewards. They have their place, they drive action, but let’s be real—they’re not your silver bullet to lasting customer loyalty. It’s like putting a band-aid on a stab wound if the rest of the experience is subpar. Your customers aren’t just point collectors in some digital treasure hunt. They’re individuals seeking a fulfilling and frictionless experience with your brand. And where does that experience crystallize? In the crucible of customer support.

So, let’s break this down. We’re about to delve into why customer rewards, though shiny and tempting, are merely the cherries on top of a far more complex sundae. Spoiler alert: if you’re looking for a long-term commitment, it’s not the rewards program you should be betting your chips on. It’s robust, dynamic, and empathetic customer support that takes the cake.

In this post, we’ll deconstruct the myths surrounding customer rewards, shed light on why they’re simply not enough and dive into what really keeps a customer coming back—top-notch customer support.

customer rewards VS customer relationship

The Illusion of Customer Retention Through Rewards

Imagine walking into your favorite store and being handed a shiny rewards card. “Buy 10, get one free,” it promises. Feels great, right? It’s like you’re part of an exclusive club. But let’s strip away the dazzle for a moment and get to the meat of the matter. Those reward cards or discount coupons might give you warm fuzzies, but they’re not solving any core issues with the product or service you’re engaging with. In short, rewards may be a nice-to-have but they’re far from a need-to-have when it comes to keeping you loyal.

To say it in plain English, customer rewards are like putting lipstick on a pig. It might look nice for a hot second, but it doesn’t change the fact that it’s still a pig. If the core experience is lacking—be it the quality of your product, the efficiency of your service, or the reliability of your support—no amount of rewards is going to keep customers sticking around.

Let’s dive into some real-world failures to illustrate the point. Remember Blockbuster? Their rewards program was a desperate attempt to keep people coming through those doors. And for a short period, it did. But Netflix’s superior, hassle-free experience knocked them out of the game. It wasn’t the lack of a rewards program that led to Netflix’s triumph; it was their focus on customer experience.

Netflix

Another case in point is JCPenney. Their rewards program was generous to a fault, offering all kinds of coupons and discounts. However, the brand still faced a nosedive. Why? Poor in-store experiences, confusing pricing strategies, and lackluster customer service were the real culprits. While rewards were being hoarded, brand loyalty was plummeting.

The moral of the story? Rewards can offer a momentary illusion of loyalty, but they can’t fix foundational cracks in the customer experience. If you want to keep your customers coming back, rewards are a welcome add-on, but they’re not your savior. And we’ll dive deeper into the hero of this narrative—customer support—in the sections to come.

Why Loyalty Programs are Just the Tip of the Iceberg

So, you’ve got a stellar rewards program in place. Points, badges, VIP tiers—the whole nine yards. But if you’re banking on that program alone to be your ride-or-die for customer retention, you’re setting yourself up for disappointment.

See, loyalty programs function on a very specific psychological principle: immediate gratification. People love getting rewards instantly or knowing they’re “just one purchase away” from some sort of benefit. It’s almost like a game, and that’s fine for short-term engagement. However, what happens when your customers face an issue, and they reach out to your customer service only to be met with apathy or incompetence? Those points aren’t going to look so appealing anymore.

The reality is, that a loyalty program can get people in the door or even back for a second round, but it’s not what’s going to keep them for the long haul. Think of it like dating; you’re initially attracted by physical qualities, but you stay for a deeper emotional and intellectual connection. If all you offer are surface-level perks, don’t be surprised when customers ghost you for someone who offers them more substance.

loyalty program

Let’s look at some more examples to drive this home. Sears had one of the most comprehensive loyalty programs, “Shop Your Way,” which included a points system and personalized deals. Despite this, Sears filed for bankruptcy in 2018. Why? Customers were not just looking for rewards; they were seeking an overall better shopping experience—one that included good customer service, in-stock items, and a straightforward online experience.

Uber is another example. They introduced their rewards program to much fanfare, offering points for every dollar spent, which could then be redeemed for free rides. However, ongoing issues like safety concerns, problematic company culture, and dubious treatment of drivers led to many users switching to alternatives like Lyft, regardless of how many “free” rides they had stacked up.

Bottom line: loyalty programs are a great side hustle for attracting customers, but they’re not the main gig. If your customer service sucks, no amount of rewards is going to save you. You need to up your customer support game, and that’s what we’re going to delve into in the next post!

Ready for the Real Deal?

Look, we’ve just scratched the surface here. Rewards programs? They’re the appetizers, not the main course. If you’re serious about customer retention, you need to be focusing on the meat and potatoes—customer support. In our next blog post, we’re going to dive deep into what makes customer support the real MVP in the customer retention game. We’ll be talking about strategies, real-world examples, and actionable tips that you can implement right now to turn your customer support from a zero to a hero.

next step in customer retention

Can’t wait? 

We get it, time is money. If you’re itching to get started on transforming your customer support experience, don’t wait for the next post. Book a call with us now and let’s get down to business. We’re here to help you make customer support your competitive edge.

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