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  • Writer's pictureProsper Fuambeng

Incentive-Driven Customer Loyalty Wanes As Incentives Diminish

Updated: Mar 27

Where We Are

Marketing managers work to increase revenue through activities like campaigns, sponsorships, and sharing well-crafted messages to enhance brand image. These activities can be expensive, so marketers constantly seek ways to optimize customer acquisition, development, and retention strategies to reduce long-term costs. Significant resources are dedicated to building long-lasting, loyal customer relationships through incentives. When customers are the focus, these incentives can reduce the effort needed for purchase decisions and encourage habitual purchasing. However, many incentive programs are not designed to nurture long-term reciprocal relationships.

Instead, brand promotion is often prioritized, resulting in programs resembling teaser rate mortgages. These incentive-driven relationships tend to fade as incentives diminish, compounded by other forces hindering solid customer-brand connections, such as:

  • Not every customer is looking for a relationship

  • Competitors are targeting the same pool of customers

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

  • Brands are too slow to respond to new sets of customers’ emotional needs created by 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 that customers 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. A customer-focused incentive would reward customers who routinely pay bills on time.

Way Forward

As mentioned, incentives can significantly reduce the effort required for purchase considerations and promote habitual purchasing. However, these incentives should be separate from core business processes. Changes in company policy typically affect business processes, which can impact any customer benefits associated with them.


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