In sickness and in health: when memberships really matter

Loyalty is put to the test when it's not profitable to honor it. Marriage vows cover sickness and hardship because promises only matter when keeping them becomes inconvenient. Loyalty programs for customers function similarly. Companies discover the true value of their promises when honoring them is costly. A recent hotel experience illustrates this point.

Upon check-in at a luxury chain's hotel, the guest with a corporate rate membership expected the usual perks, but was denied them. The response was polite yet clear: corporate members are not entitled to member benefits. This penalized the customer for their company's high usage of hotel rooms. Loyalty customers consistently demonstrate higher spending, frequency, and lower cost to serve.

They also cross various product offerings and recommend brands to similar individuals. In the guest's case, the chain's corporate-rate members were worth more over a decade than full-rate guests they will never encounter. The exclusion rule was designed to protect margins on one room, one night, and one channel, but instead put the brand's least risky relationship at risk.

Customer loyalty programs are more of a liability than an asset, as they are promises made in exchange for data and behavior already provided by the customer. Applying loyalty rules based on technicalities rather than relationship value is detrimental to the enterprise. Coherence, consistency, and recognition of loyalty are crucial for effective customer management.

Companies must ensure loyalty is recognized and rewarded consistently, regardless of channel, rate, or other factors. Ultimately, someone must own the entire customer relationship, not just individual transactions, and be accountable for maintaining the promise of loyalty over the customer's lifetime.