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Loyalty programs with true value propositions

Michael Lowenstein
Beyond Principal
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.
This was last published in April 2004

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