Imagine if your employer offered a signing bonus to new employees, but no raises or increased benefits for longevity. Sounds crazy, right? While the initial appeal of a deal to join the company is pretty sweet, there isn’t much incentive to stay with the company long-term. Eventually the company would catch on when they would see an influx of new hires, but a declining retention rate.
And yet, companies practice this tactic and treat their customers this way all the time. I recently received an e-mail from my bank, Capital One 360, formerly ING Direct. They offered, “If you open a savings account, we’ll give you a $75 bonus!” A great deal, right? A savvy move to attract new customers, and every company needs to do this. But this bonus only applies if it is your FIRST savings account with them. I mean, why would Capital One want to extend a bonus to its existing customers? They’re already account holders – who cares?! I’ve been with this bank since 2006, almost eight years at the time of this post, and I’ve not received a bonus. I continue to earn my minuscule yield (less than 1%) for such loyalty. When they are willing to offer someone who has no connection to their company a $75 reward and bypass a loyal customer who has stayed with them basically since their inception, it erodes the bond between company and client.
I have purchased an annual membership from Barnes & Noble Booksellers for years. It entitled me to free shipping on all purchases and significant discounts on books, DVDs and café purchases. In New York City, my friend and I would engage in turf wars when deciding which bookstore to browse while we were killing time before a movie. He was a Borders man, and while he may have temporarily won a few times, their bankruptcy showed him who was boss. Even against my own interests, I stay with Barnes & Noble because I’m a member and we’ve had a relationship for years. Amazon offers way lower prices, but B&N came first and they reward my loyalty.
Yet, at one point, Barnes & Noble made this mistake too. When it happened, I channeled my inner-grandpa and wrote a strongly worded letter! In a desperate attempt to increase sales at a low point in the economy, the company decided to extend member benefits to everyone for a limited time. Wow! What a great way to increase sales and slap the person who pays a $25 annual fee for access to those benefits. Suddenly, my membership was worthless. I thought, “What’s the point of being a member if I don’t NEED to be a member for free shipping and discounts?” They must have paid attention to my letter because I have not seen a repeat offense in the last few years.
Now, non-profit organizations are not immune from heading down this dark path. The desperation to recruit volunteers can be overwhelming. Recently, I volunteered 50+ hours for the Starz Denver Film Festival over a two-week period. I earned “platinum volunteer” status. That’s right, ladies, I had a special badge and everything. I signed up for all of my volunteer shifts a week in advance and carefully planned out which films I would see. I was reliable and earned that platinum designation. In return for my service, I received one voucher per shift to use at the Sie Film Center in Denver year-round. However, the Festival would be low on volunteers for certain nights and send desperate pleas for people to sign-up at the last minute. If they signed up, they’d receive DOUBLE vouchers and even a chance to win a premium membership to the film center.
To be clear, I didn’t volunteer for the vouchers. But it did feel like a slight when I had signed up early and they placed a higher value on last-minute volunteers. Other volunteers told me, “Next year, I’m going to wait until they send the last-minute emails so I can get double vouchers.” Their plan to fill open shifts got them what they needed. But at what cost? Next year, they will battle volunteers not signing up in advance in hopes of scoring more vouchers. Is there a better way? The festival planners have to keep in mind what their ultimate goal is. The best scenario is not to need last-minute volunteers, right? Offering double vouchers for volunteers who sign up for shifts at least one week in advance would promote early registration. It actually discourages the last-minute mentality. It solves their problem and rewards their BEST volunteers.
If you have a personal story where a company has an excellent record of rewarding loyalty in an effective way, please share it in the comments below. Are you a business owner who does something special for your best and most frequent customers? Share your ideas below!
- Ouch: Samsung beats out Apple in customer loyalty for the first time … and so does Amazon (venturebeat.com)
- Barnes & Noble Reports Profit, but Sales Fall (nytimes.com)
- Barnes & Noble’s Nook business falls more than 32% (geekwire.com)
- Wahoo’s Fish Taco launches Social Circle Loyalty(TM) Mobile App (virtual-strategy.com)