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  • Writer's pictureProsper Fuambeng

Incentive-Driven Customer Loyalty Dissipates As The Incentives

Where We Are

Marketing managers aim to improve revenue through various marketing activities, including campaigns, sponsorships, and propagating well-crafted, holistic, and compelling messages to enhance brand image. These activities are costly. So, to reduce long-term costs, marketers are constantly seeking ways to optimize customer acquisition, development, and retention strategies. Enormous resources are dedicated to building long-lasting, loyal customer relationships, mainly through extrinsic enticements. When customers are the focus, such incentives go a long way to reduce effortful purchase considerations and encourage habitual purchasing. However, many incentive programs are not designed to nurture long-term reciprocal relationships.

Instead, brand promotion is usually the focus, leading to programs that resemble teaser rate mortgages. Naturally, such relationships tend to fade away as the incentives diminish. More so because other forces hinder the formation of solid customer-brand relationships:

  • Not every customer is looking for a relationship

  • Competitors are targeting the same pool of customers

  • Some marketing activities are too transactional in nature and do not create the desired bonds

  • Brands are too slow to catch up with new sets of customers’ emotional needs created because of technological advancements

In Actuality

Customers reciprocate unique experiences through positive behaviors such as actively promoting their preferred brands to friends and family and positively engaging with the brands on social media. Customers are also more emotional nowadays, exhibiting crankiness, edginess, and anxiety, and usually take their frustrations to the internet when shifts in business policies diminish the benefits they previously enjoyed. For example, several companies, including Consumers Energy, T-Mobile, and AT&T, announced changes to their autopay policies a few months ago. Some reduced autopay discounts required customers to switch payment methods, from credit to debit cards, to continue receiving the deals. Others requested customers to link bank accounts to autopay. As a result, customers expressed their dissatisfaction on the internet. Many customers voiced concerns about the security risks of linking debit cards and bank accounts to autopay, particularly as some of these companies had recently been hacked. Based on grievances shared in a T-Mobile community forum, customers believe that the recent change to the autopay policy violates their service agreement. There is a shared sense of frustration from tenured and recently acquired customers. Incentives shouldn’t turn into frustrations.

Way Forward

Autopay discounts encourage customers to pay their bills on time, significantly benefiting service providers as continuous cash flow is ensured and bad debt write-offs are reduced. A customer-focused incentive would reward customers who routinely pay bills on time.

Reach Out

Brands need to find ways to integrate themselves into the dynamic life journeys of their customers. Let Prosper Loyalytics tap into reciprocal customer analytics to help you stay abreast with customers' changing needs and improve how you think about customers. Here is a starting point - Customers do not depreciate; Brands depreciate.

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