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Loyalty programs with true value propositions

Michael Lowenstein
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Published: 29 Apr 2004
I work for MasterCard New Zealand. The situation we have in our country is that there are a bunch of retailers marketing so called Customer Loyalty Programs, but they are actually no more than Reward programs. We have one Supermarket group in particular who I believe has a major dilemma. They have 3 consumer offerings. One chain targeted to a mid-upper socio economic segment, which is already aligned to a national 'Fly Buys' type loyalty program. The second group is a box store, where the positioning is 'No Frills', it is considered that this group cannot afford a loyalty program due to it's positioning and fine margins. The third offering is a convenience chain that tends to be more suburban-based, and has a multitude of customers, however they do tend towards an older demographic. Our challenge is we are trying to launch a MasterCard which can have a loyalty value proposition to all 3 chains, yet also allow each to differentiate itself. Any thoughts you may have would be appreciated.
At the risk of appearing too negative regarding your question and situation, I've attached a draft chapter from my new book. Part of the chapter addresses 'fuzzy value propositions' as generated by so-called loyalty programs and other viral marketing devices. Your question is really one of developing segmented, micro-segmented, and individualized programmatic value, as perceived and desired by customers; and, unlike Tesco in the U.K., for example, most of these retail loyalty programs endeavor to kill ants with cannons, offering little differentiated, personalized value. Regards.

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