Tuesday, August 17, 2010

The Unloyalty Reward Card

Loyalty reward programs are very popular. Fortune 500 companies to the small coffee shop around the corner own ones, with different level of technology and benefits. Now what about creating a unloyalty reward program? What would it be? Well, let's imaging that instead of rewarding customers that purchase often in your stores, you would propose them to get benefits from consuming at your competitors?

You might think this idea is completely silly. Nevertheless, the unloyalty reward program exists. It has emerged in the UK, in an Eastern London neighborhood. The Prufock coffee has designed a card it hands out to its customers in order for them to try out different coffee shop in the neighborhood. Each time they consume into a different one, they receive a stamp, which allow them to get a free coffee at Prufock's. Each time they get their free coffee and purchase a new one, the customer receive a new card ready to be stamped by a competitor.

You might think this is totally counter productive. In terms of customer relationship management it doesn't make no sense. Isn't the purpose of such a program to keep away your customers from your competitors? On the contrary, this program incentive customers to check around. In 6 months, 6000 of those cards have been released.

So Why Would They Do That?

The main reason is they want to promote the consumption of their product, coffee. They believe that by pushing customers to visit several coffee shops, it will be better for them because coffee consumption will be pushed.

Let's face it, this strategy could work in declining markets. Hence, coffee shops are going in limbo. Competition of chains like Starbucks, or Mc Donald's which has launched a new concept to reach coffee lovers, it is difficult for small stores to counterattack. By doing so, they somehow provide an alternative to customers and secure their niche.

Also, by providing the opportunity to customers to visit other stores, you allow them to compare, and therefore get some insights, which will provide you a clear landscape of your competition. It will give by your own customers the idea of what they are looking for, what your strenghts are, and what you need to work on.

I'd like to see how other companies could benefit from such a customer relationship management strategy in other industries. What do you think about it?