Use Loyalty Programs to improve your Net Promoter Score

The Net Promoter score is very popular in business and marketing circles these days.

Proponents of the Net Promoter scores claim that it is a better metric than customer satisfaction. The thesis is that satisfied customers aren’t good enough. In an increasingly networked world, you need customers who are brand evangelists – customers who refer their friends and colleagues to your brand.

Interestingly, the Wikipedia article on Net Promoter Score also states that the above thesis is controversial.

Great loyalty programs improve brand equity. Two of my favorite loyalty programs are Starwood’s Preferred Guest (SPG) loyalty program and American Express’s Membership Rewards (MR) program. Sure, these programs increase my purchases from these suppliers because they effectively provide me with a small rebate – a rational benefit – and other rational perks (e.g., room upgrades at the W hotel). But more importantly, these programs create a positive emotional connection with their brands!

Amex’s MR program sends me beautiful catalogs showing me the rewards I can get. While I would never order anything from the catalog (everyone knows, the best use of MR points is FF miles), the catalog triggers my imagination and provides me a vehicle of escapism.

Likewise, the SPG web site also provides me with a vehicle of interactive escapism – I can imagine using my points for trips to exotic places like the Seychelles and Maldives.

The SPG and MR programs have very few restrictions on how you use your points – i.e., you can redeem instantly with no annoying blackout dates that would turn me into a brand detractor.

Both programs cause me to visit their brand web sites way more frequently than I otherwise would. Both programs help turn me into a brand evangelist, and indubitably, increase their brand’s Net Promoter score.

Some Funny and Infamous Examples of Abuse

There are at least two very famous and funny cases of abuses to loyalty programs, where customers were able to game the system. The first is the story David Phillips (The Pudding Guy). The second is more recent story of an Australian commonly known as “Beer Guy”.

While marketers should be careful not to open their program to abuses, both Healthy Choice foods and American Express received tons of almost free publicity from the above noted abuses. It also reminds me of a Capri Sun loyalty promotion that I tried to game to get a gift certificate to K.B. Toys – I figured out how to beat the promotion, bought loads of Capri Sun, but then forgot to redeem my points in time and wound up with a sticky collection of Capri sun containers.

Thus, a loyalty program that has the potential to be lucrative to the consumer (e.g., MyCokeRewards) may actually build enough brand equity and produce enough incremental sales to make up for a few abuses.

And clearly, having a compelling transactional web site for your loyalty program is critical to making it interactive for your brand.