Read this before you sign up for a loyalty program

luchnyu/Shutterstock
luchnyu/Shutterstock
For years, consumer advocates like me have been warning consumers like you that loyalty programs aren’t the “win-win” propositions companies claim they are.

To which loyalty program apologists, whose judgment is too often distorted by the intoxicating Kool-Aid of points and miles, countered: Prove it!

Elliott Advocacy is underwritten by Travel Leaders Group. Travel Leaders Group is transforming travel through its progressive approach toward each unique travel experience. Travel Leaders Group assists millions of travelers through its leisure, business and network travel operations under a variety of diversified divisions and brands including All Aboard Travel, Andrew Harper Travel, Colletts Travel, Corporate Travel Services, CruCon Cruise Outlet, Cruise Specialists, Nexion, Protravel International, SinglesCruise.com, Travel Leaders Corporate, Travel Leaders Network and Tzell Travel Group, and its merger with ALTOUR. With more than 7,000 agency locations and 52,000 travel advisors, Travel Leaders Group ranks as one of the industry’s largest retail travel agency companies.

Well, now we have that proof.

A new study of hotel frequent-guest programs suggests that, far from costing companies money, the programs increase their share of room nights by anywhere from 150 percent to 500 percent. Just over 7 of 10 guests purchased at least one additional room night with real money, according to the study by Phoenix Marketing International.

The researchers even came up with a clever catch-phrase for the trap. They called it the loyalty program continuum. (Queue the eerie music, please.)

“As a person moves up this loyalty activity continuum, from becoming a member to being an active member to achieving elite status, the share of room nights they give to hotels in a particular loyalty program increases dramatically,” says Greg Diaz, a vice president at Phoenix.

This was no fly-by-night poll. The company surveyed more than 12,000 frequent-guest program members in 11 countries and measured the impact that the programs have on hotel usage. Its findings reflect other studies, which suggest guests spend an average of 40 percent more on a company when they are active loyalty program members.

Maybe you stopped reading this story when you saw the headline and my name, because when it comes to loyalty programs, you won’t believe a word I write. That’s fine, by the way. I’m an unapologetic loyalty program critic, and you are not my audience, so feel free to click away now.

Everyone else, listen up: Loyalty programs are “win-lose” propositions. Unless you are willing to not just study endless program rules, but to spend hours on end keeping up with the frequent changes, you will almost certainly lose. Here are the areas where they can stick it to you:

You’ll probably spend more than you expect. Several airline loyalty programs now require a minimum spend level per year in order to reach their coveted “elite” status. What do you get in return? Oddly, many of the “perks” you get were given to all customers just a few years ago, such as having your bag included in the price of your ticket (or, as they somewhat dishonestly call it, checking a “free” bag).

It will change the way you consume (and not necessarily for the better). Whether you’re a member of a grocery store loyalty program or a hotel program, membership will almost certainly affect your future purchasing decisions. You’ll give your business to the company, often when it isn’t in your own best interests. This form of blind loyalty is the Holy Grail for programs — making consumers so fixated on earning points that they ignore the fact that they’re buying a terrible product.

They’ll move the goalposts without telling you. Points and miles expire. Rules and redemption levels change. Don’t believe me? Read your program agreement. I hear from unhappy readers on an almost hourly basis who are trying to recover expired points or redeem miles for a ticket they’ll never get. So what is loyalty? It’s whatever a company says it is right now, and tomorrow it may change.

I’m not saying you shouldn’t participate in any loyalty program. Obviously, if you already spend a lot of money with a gas station, bookstore or grocery store, why wouldn’t you also collect some of the perks that go along with being a frequent customer? What I am saying is: Mind the pitfalls. Loyalty programs are rigged to favor the company. They’re designed to manipulate you into spending more and short-circuiting your common sense.

And if you really drink that Kool-Aid, you’ll defend a program when it moves the goalposts and allows your points to expire. Sounds crazy, I know, but watch the comments and you’ll see the apologists line up to tell me how wrong I am.

So now you know that loyalty programs are profit centers for many companies and that they’re designed to turn you into a mindless purchasing zombie.

So what are you gonna do about it?

Who benefits more from a loyalty program?

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85 thoughts on “Read this before you sign up for a loyalty program

  1. Everyone should realize that these programs benefit the company more. That’s why they have them, to make more money. If one can eke out enough benefit to make it worthwhile, that’s another question. Sometimes you can, sometimes you can’t.

    1. That is the crux of the matter. If you can get some benefit from it without costing yourself more than the benefit is worth to you, then they’re a good deal for you. If not, move on. And, of course, the companies don’t offer them just to be nice. Seems like nobody could argue with those points.

      But what is always funny about Chris’ articles is that he seems to believe these programs are automatically bad unless the consumer could somehow come out substantially ahead. I don’t think he’s ever spelled out what level he’d find acceptable, but merely getting some benefit isn’t enough. I think he’d need to see a study like this showing the companies losing money on them or something. But, of course, that isn’t going to happen.

    2. Sure, the companies use them to get more profit out of the average customer. The key is, don’t be the ‘average’ customer. Be flexible and ready to move, and constantly reevaluate the program in an objective manner.

      We were staunch members of Delta’s SkyPeso program. Not only did we favor Delta for booking flights, but we used Amex membership rewards transfers to convert to SkyPesos for big trips. But we’re not lemmings. When Delta started making changes that devalued the SkyPeso even more, we gradually started moving to Southwest. This year, we’ve flying Southwest whenever possible because of Delta’s devaluation of the lounge access to Amex Platinum members. Let’s face it, I can fly Southwest through Las Vegas and use the amazing Centurion Lounge or I can sit in a crowded terminal waiting for my Delta flight.

      The point is, customers are flexible and can change loyalty just like loyalty programs can devalue their program. And as a ‘former’ SkyPeso chaser, I’m convinced that Southwest offers a FAR superior flying experience overall. When there’s any problem, like when we need to change a flight, that’s when you see the true value of Southwest.

  2. Well of course the loyalty program benefits the company as a whole more than consumers. Any business transaction benefits the company more than the consumer. Consider your bank. You put money in your savings account and earn a pittance interest rate. The bank then lends someone else the same money and charge 10, 15, 20% depending on the financial product, but only pays you 1%

    Loyalty programs are an investment like any other. There is one and only one yardstick. Are you getting a sufficient return on your investment measured by the criteria which are important to you. If the answer is yes, then participate. If the answer is no, don’t. Its quite simple.

    It’s like in freshman economics. Pizza Hut sells a slice of pizza for $3.00. I’m hungry so the pizza is worth $5.00 to me. Someone else just ate so the same slice of pizza is worth 50 cents. I buy a slice, the other person doesn’t. How much the pizza cost to make, whether I bought it instead of a burger, etc, is all just background noise. I got a $2.00 return on my $3.00 investment so it was a good deal for me. The other person didn’t benefit so he declined to purchase a slice of pizza.

    I agree wholeheartedly that you must understand at least the general rules and pitfalls else you may be caught unawares.

    1. Loyalty programs are an “investment” in only the same way that Bitcoin is. The last point in the article is the most important: the value of your loyalty points can change at any time. Check the current state of the rules when you FIRST get the idea of redeeming points, not when you click on the redemption page to cash out for your treasured flight class upgrade and find out that it now takes double the miles you saved.

      1. What the hospitality industry can do, and what they actually do are separate matters. Almost all these programs give warnings or a grace period when they adjust their programs. The last thing a company wants to do is to p*ssoff loyal customers so much that you choose to never use the company again.

        As Carver Clark Farrow and others have pointed out, it is the consumer’s obligation to stay informed. Or else they will find point/mile inflation has eaten away at their loyalty program goal. Doubling point/mile requirements is a bit of hyperbole. Usually prize inflation is much more modest.

  3. In other news, water is wet. I think few people argue that companies set up loyalty programs because they love their customers so very, very, much. Of COURSE they are designed to increase (or, at the least, prevent the loss of) business! Their executives should be fired if the loyalty programs didn’t achieve that goal.

    I will point out that if your FF miles expiring is a big problem, perhaps you aren’t the frequent customer loyalty programs are designed to attract and retain, given that you don’t even need to take a single flight in order to keep those miles active.

    1. Perfect answer there! Usually those who complain about the limitations are those who really don’t qualify as a “frequent” traveller or guest at all. The road warriors (who these are really set up for), DO enjoy the benefits of membership, and are who they are truly geared for.

    1. Specious conclusion of valid study. Question: Does the Stash Program work? Answer: Yes, drives higher revenues to the Stash member hotels.

      Where in this study is there anything about the utility of the stays? In other words, where does the study say the consumer would not have spent the money at any hospitality establishment? Or would have bought a cheaper room? Or the Stash program consumer did not actually need a hotel bed for the night? Or the consumer decides to stay at a hotel rather than at home in order to get points? It doesn’t say any of those things because those conclusions cannot be drawn from the study.

      1. Agreed. I took a look at it. The conclusion proffered here is totally specious. The study has a particular focus and does not attempt to answer the effect on consumer total spending, but merely the spending on travel within the loyalty program group. That of course says nothing about the ultimate effect on consumers.

        I spent 75 nights at Marriott hotels. When I ditched Marriott, those nights went to Starwood. Starwood hotels saw a huge increase in the number of hotels rooms that booked. But the total number of nights remained unchanged.

        But Starwood benefited as I might have spread those nights to Hilton, Hyatt, etc.

    2. Unless you know the study was blindly funded you should you also be wary of those results. The people doing studies are under immense pressure to give the people paying for it the results they want.

    3. The only “eye opening” thing I find about that study is it seems to have drawn conclusions that are utter and complete rubbish. Did I spend 45% more nights in a hotel because of being in a loyalty program? No. Did I spend more money at hotels because of a loyalty program? NO I spent LESS because I got free internet, free snacks, free breakfast.
      This reminds me of the time when you quoted for years a study they did on mobile phones where the conclusion was that there was “equal distraction” when people used an in-car kit or headphones as opposed to holding the phone to one ear and driving one-handed head tilted. The only way to get a statistic like that would be to get a sampling of people who had never seen a mobile phone in their life and were equally uncomfortable with both.
      Picking out obscure studies that a reasonable person would find nonsense solely to advance a flawed opinion only undermines credibility in my mind.
      There are several commenters who have taken considerable trouble to point out how unrealistic your advice is about loyalty programs is, and I would tend to agree. Everyone is entitled to their opinion, however, no matter how absurd.

  4. It was too late for me. I had already signed up for a number of loyalty programs before I saw this article. I stopped reading the article as soon as I saw ‘apologist’ and ‘drink the kool-aid’.

  5. I suggest that the biggest problem in loyalty programs is “moving the goal posts.” Customers enter into a loyalty program arrangement over a long period, only to find the benefits are not the same as originally stated. I further suggest that this does more damage to the loyalty relationship than the business perceives.

    1. But if you NEED a long period, then you are not actually a “frequent” guest. THAT is the problem. Those who actually do travel often, don’t find that to be a problem. And those are the guests the loyalty programs are really looking for – the ones who do use them often. So they really do NOT care if the person who has flown them 3 times in the last several years whine when the limits go up, or mileage needed increases. It does not really present a problem for the frequent guests.

    1. I spend the same way as you do. The difference is, I sign up for ALL the loyalty programs. Occasionally I even earn a reward! But I don’t make any purchase decisions based on so-called “loyalty”.

      That, and ONLY that, is the way for a consumer to benefit from loyalty programs. In which case, calling them “loyalty programs” becomes pretty ironic.

      I am loyal to no business. But if they want to give me something for free, I’ll take it!

        1. Not necessarily. In promotions they have notified me when I have earned a few night. But for points, those vary according to date of stay, type of hotel within the chain, destination for airline points needed. If you don’t have the time to play the game, don’t join. They don’t hand hold you.

          1. I didn’t expect them to either. And I know my limitations, which is why I don’t belong..I’m not going to monitor them, so in the end it would not be any benefit.

          2. Yes, they take management and for some it doesn’t work. But for others, the membership can be a nice benefit.

        2. This isn’t a regarding a travel loyalty program, but apparently I, at some point signed up for a Walgreen’s points program (I don’t even remember doing it). The other night I was there buying some cold medicine and the cashier told me that I had $2 worth of points and asked me if I wanted to use them toward my purchase (I did). I go there because it’s near my house, so it’s easy. I’d be going anyway, so why not? I think that Autozone has a similar program that my husband uses and they’ll also usually tell him when he has funds available.

    2. I belong to the best loyalty program out there. It’s the “Me” loyalty program. I’m loyal to me. Loyal to companies? No way!

      1. Agreed. Though some might call me an apologist (merely a fancy though perjorative sounding word for “defender”) I am loyal to me. I ditch a program/hotel the instant it stops working for me.

    3. Good choice! But if you know you tend to book a particular airline or hotel more often than not, the benefits might work for you, too. A free upgrade, free flight or free room night now and then might actually be a fun benefit!

  6. The key point to take away from this is do not enter into anything “blindly”. Learn to take advantage of your normal spending habits, and apply them judiciouslyl. Instead of being jealous of the perks other receive take the time to see if you too can get them with your normal routines. I do not fly to earn points nor do I stay in hotels to earn points. I do not rent cars to earn points but I do all those things often. Joining the frequent user programs does not cost me money out of pocket, I would be taking those particular flights, renting those specific cars, and staying in those hotels, or even buying the groceries at my local stores anyway. No Kool-aid involved at all.

    1. If you sign up for ALL the loyalty programs, and then just make your purchases based on what’s best for you, you might eventually actually earn a reward somewhere. And you will never have to worry that you might have subconsciously directed your spend to a company because of points.

      That works for me.

      1. I should clarify that I do belong to several frequent traveler and grocery/drug store/pet food chain programs, but only to the ones that are useful to me. (for example I do not belong to airlines that do not serve my airport, or stores that are not located in my home city)

      2. I take a slightly different take. I’ve signed up for all the loyalty programs as well. I make the purchase that is best for me, taking into account, the effect the loyalty program would have. I took a family trip to Vegas a couple years ago. I had 49 nights with Starwood. The family stayed at the Venetian, I stayed at the Westin Las Vegas. That night put me into Lifetime Platinum status with Starwood. That means among other things, I get free wi-fi and free breakfast at almost every Starwood hotel for the rest of my life. That’s a $20-30 nightly benefit which I can include in my cost analysis.

  7. I really really don’t get the (sometimes quite rabid) discourse on loyalty programs. As someone who travels a lot for my work (and a few times a year for pleasure) I belong to just about ALL of them. Signing up costs me nothing more than a few minutes and a (used for nothing else) email address. My travel decisions are never made based upon belonging to a specific program and are always based on value to me (whether it’s cost, location, etc…), so I accrue points regardless of who I fly or where I stay. If I someday have enough points or miles to get something out of it, great. If not, no harm no foul because I didn’t contort myself to fly X miles or stay Y nights. Belonging to ONE loyalty program per industry and bending oneself around the axle to try and earn trips/stays that end up costing more than a competitor is possibly problematic, sure; but if so, it’s a self-inflicted problem and if a consumer chooses to inflict it upon him/herself, why blame the company for that?

    1. Finally…someone else who understands how to actually win at the “loyalty program” game! I do the exact same thing.

    2. You said it, Mel65. My sentiments precisely. Sometimes the magic works, sometimes it doesn’t. Chris is preaching to his choir here and feels the need to call everyone who disagrees with him “apologists”. But what would we do without his snarkiness to begin our day with? 🙂

  8. 1. “You’ll probably spend more than you expect.” Reality check. You no longer get those perks. If you want them, you will have to pay for them or join the loyalty program or get the credit card. So whining about what used-to-be is not a valid point.

    2. “It will change the way you consume (and not necessarily for the better).” I do not believe the consumer is natively dumb. Consumers know what things cost and who delivers value and service. Hence, weaker companies die and new ones delivering better value and higher service emerge in many cases. It only changes the way you consume if you make that decision. No one forces you to stay loyal or buy needlessly. Freedom used to be something revered, not vilified. Marketing people use many devices to encourage spending, such as loss-leaders, sales and loyalty programs. The same specious argument could be made for entering a store to buy a loss-leader item and ending up buying other things. Is that evil? Hardly. Consumers are capable of adding up net savings.

    3. “They’ll move the goalposts without telling you.” Yes, companies reserve the right to change the rules. Although the agreements say they can do it almost at will, almost always there is fair warning to the consumer that the rules will change at some future date. Also, consumers are best advised not to bank points, miles or whatever for use several years out. Use it or lose it is not just a slogan for exercise and health nuts.

    There is absolutely nothing at all sinister about these loyalty programs. The consumer is well and fully informed, thanks to consumer publications and columns such as this one. There are no unknown “gotcha’s”. Read the rules and continue to exercise rational consumer behavior.

    1. I did not see anywhere in which Christopher suggested these programs are “sinister”. What I saw was his suggestion that some people end up losing the game because they direct their expenditures to one company for the purpose of earning points…even if in doing so they are paying more, or getting less. Sinister? No. A trap that some people fall into? Yup.

  9. “I’m not saying you shouldn’t participate in any loyalty program.”

    Yes you are. From previous articles:

    “To be clear: Everyone should not participate in a rewards program.”

    “Frequent Flier Programs are a Scam – Here’s Why You Should Quit Yours Now”

    “In fact, I’d recommend you to take it one step further. You can do this right now. Remove all the frequent flier cards from your pocket. Grab a pair of scissors, cut the plastic into tiny little pieces and toss it in the trash.”

    Here are your arguments: “You’ll probably spend more than you expect,” “It will change the way you consume,” and “They’ll move the goalposts without telling you.” Do you have credit cards? All of these arguments apply equally well to credit cards. Do you read sales flyers? Same arguments. Ever been to Disney? Every buy anything with a “rebate”?

  10. The frequent traveler programs have worked well for me.
    I have to make weekly business trips to Orange County SNA. I live near SJC, so it makes sense to use Southwest, as they have direct flights every 2 hours from SJC. There really are no other options from SJC. So I joined their frequent flyer program.
    I have to rent a car anyway when I am at SNA, so I use National, since my company has a special rate with them. So I joined their frequent renter program, as well.
    I have to stay in a hotel anyway when I’m at SNA, so I choose to stay at IHG hotels. I joined their frequent guest program, as well.
    So, over time, I’ve built up a huge amount of points/miles with these companies. Now, I am having some dental issues where I need to have dental implants installed. This is extremely expensive work, and could run into tens of thousands of dollars. I found a clinic in the Midwest that has a very good price, about half the price of anything on the West Coast. So I have to make a few trips to Indiana to get the dental work done.
    I have booked the travel, and am getting free flights, free hotel and free rental car for all the trips. So, IMO, I am coming out ahead. I am required to travel for business, so I haven’t booked any more flights, hotels or cars than I had to, and the rates I am paying for these are already the lowest. So I don’t think I am spending 40% additional money, as the article says.

    1. Good point, extramail. I forgot to mention that my company requires us to use Concur to book air, hotel and car. Concur restricts us to choosing the lowest fare/rate. So there is no way that I am spending 40% more than I have to.

      1. Our company required Concur, as well. But I joined all the programs and put them into my profile so I get points on whatever flight/whatever hotel I get booked into. Once in a while I actually get something that says I have a free night at XYZ hotel and I’m pleasantly surprised. But I don’t ever make an effort to gain points.

        1. And this is how many people do it, too. Those who are obsessed with points probably are obsessed with other things in their life, too. But big if they want to do a mileage run. There are benefits to belonging, even to low entry travelers.

          1. Most if not all my (repeat) clients provide me with FQTV info because they know they have better online access to their PNR (i.e. to OLCI) if I have entered that info for them. Frankly, this discussion is getting moot. It is just easier to book with your FQTV whether you want to earn or use the points.
            In fact nowadays, my clients expect me to store their passport info, credit card info, FQTV and contact info so all they do is send me an Instant Message about their travel plan. Also, since I do search Awards redemptions for others, and I am able to get it, I can’t figure out what’s horribly wrong with this picture. Sure they constantly devalue. So does the dollar.

  11. The loyalty programs do work for me. Husband flies and stays in hotels because that is part of his job. His company pays those expenses. When we go on vacation, we use those points for “free” airfare and “free” hotel rooms. Two of the most expensive parts of the vacation are essentially paid for by husbands employer. (Many years ago, some businesses tried to collect those points because they are the ones who paid for those points. And, at one time, the government floated the idea of taxing those points because it saw that as a “benefit” to the employee). Know the rules and make them work for you.

    And, lest you think he wastes his companies’ money by only choosing his “loyalty” program, don’t. Besides the fact that he is a good steward of money, he is restricted by the booking engine to the least expensive flights and hotels available at the time he has to travel.

    1. Well of COURSE any loyalty program is going to benefit the consumer, when the consumer is not actually the one paying the bills but is getting the rewards!

      1. Not a valid comparison. Suppose the person were self employed, and had to travel to visit clients, and paid all the the travel costs themselves. This is necessary travel. If they choose the lowest fares/rates for all their travel, as the OP says they do, and then they are able to use the miles/points for free vacation travel, then they come out ahead.

        1. Having spent some time managing corporate travel, I can relay my experiences. I had many discussions with employees about why we would use one airline over another without regards to the loyalty program of the traveler. They were free to earn miles on the carrier we chose, but their membership was not part of our decision making process. Employees wanted to take American Airlines from the east coast to Chicago to Tokyo and then switch to Cathay to Hong Kong. We preferred a flight to Newark and then Continental to Hong Kong for price and schedule.

          Several people left to start their own company. I would get calls from them about how to get the same deals on Continental. They no longer cared about their AA miles. (We had other deals on other airlines for different destinations, I used the Continental as just one example.)

          Bottom line…when the company was paying the bill, they wanted miles and time was not an issue because they were on the clock. When they became the boss and paid the bill, they wanted price and convenience to save their company money and productivity. (We had the same issue with hotels and rental cars.)

  12. I really dislike these kind of binary polls. I don’t think there’s an absolute answer. As someone who uses these programs intelligently (vs blinding following loyalty cards), I would have voted BOTH.

  13. Dumb question. Of course a program created by the company is going to benefit them. It only proves that 9% of the respondents are clueless.

  14. I gave up on loyalty program for sometimes now. Don’t bother anymore to get Elite Status as now we can “pay per use” with so call Global/Premium Service. For Lounge Access, Priority Pass can do better job now with their extended network.

  15. The rules change all the time on many different things, always to the benefit of the company. This does not mean the programs should be avoided. They are beneficial to many.

    My grocery store chain has put a limit in place of 3 on how many duplicate coupons you can use at one time. Previously, you could use as many coupons as you wanted each time you shopped. They also eliminated doubling of value for most types of coupons. The rules changed and my rewards have been devalued. Does this mean I should therefore refuse to participate in their rewards program? No, because for very little effort I still receive a good value.

    My bank gave me a 6% interest rate on savings when I joined them. They also paid 2% on checking accounts and there were no fees. Their credit card had a 12% interest charge. Now I get 0.6% and 0.05% on those same accounts and they charge a $25 a month fee if you don’t maintain a minimum balance. And their credit card rate went to 29%. Should I quit banking because the rules changed and my benefits are reduced? No, because I need a bank and this one still offers better service and lower cost than any other out there I have found.

    The airline I fly most has put in a minimum spending limit to go along with the mileage requirements in order to maintain the various levels of frequent flyer benefits. So I should therefore refuse to belong to their program? No, because after examining my spending I see I will easily meet their requirements and will still continue to receive the benefits for my level of flying.

    My favorite hotel chain changed their reward point redemption requirement meaning I need to have twice as many points to get a room. So I guess I should drop out of their rewards program too. But no, I won’t because I have never cashed in points for a “free” night. I use the points I collect each year to buy my way into a higher tier of their frequent stayer program. At the higher tier, I receive things like complimentary WiFi, breakfasts, room upgrades, late check out, last minute reservation guarantees for sold out hotels and many more benefits that have a real dollar amount assigned and directly reflect my total per night costs.

    What you get out of the many frequent customer programs just has to be what provides you with a real value at no or minimal cost. Don’t be foolish in your choices.

  16. Notice to all Hotels & Airlines

    Permit me to introduce your industry to the Miami510 Loyalty Program
    which I invite all of you to join. Here’s how it works:

    I decide where and when I want to fly and how long I’m going to stay and the minimum comforts I require. Vendors are welcome to submit their schedules and I will choose the ones that are most convenient and economically advantageous to me.

    If you’re conscientious, you will have a number of flights at the right time, at the lowest cost, with least restrictions. Well situated hotels must come up with a
    clean, comfortable, well-appointed room at a reasonable cost. Miami510 loyalty points will be subtracted for unreasonable billing and anti-consumer restrictions; resort fees, WiFi charges, room safe fees, etc.

    Only then will my loyalty be bestowed upon you in the form of reservations and payment. I couldn’t give a traveling (or flying) fig for your point system. I won’t fly earlier or later than I would like in the interest of your points. If you want my loyalty points, then you must accommodate me.

  17. @elliottc:disqus

    Loyal Programs aren’t inherently bad if consumers don’t alter their shopping habits to participate.

    Take Starbucks: You Drink Coffee. Buying enough cups = Incentive (Loyalty) Coffee
    You ‘d shop there without the Incentive Program.

    Hotel Programs: You need a place to sleep. if one chain is superior, customers might as well join loyalty programs if repeat stays are anticipated.

    I stay at one hotel a lot due to ongoing health problems. I earn points toward reward nights. My habits aren’t altered, and I’m going to spend the money one way or another.

      1. Yes, if spending negates benefits of reward program. You stay extra night at hotel just for points. Yet, value of those points is inferior to. Priice paid for room.

        1. Therein lies the disconnect. No one stays an extra night at a hotel for points. Most programs will permit you to buy points far cheaper than you would by staying at a hotel. You stay an extra night for status. The so-called mattress runs are about achieving a higher level of status and perks that are greater than cost of the wasted nights.

          My first mattress run: I booked a TownePlace Inn by Marriott for $75, checked in, then left. The result was renewing Platinum status at Marriott.

          The result:

          Wi-Fi at no additional cost at all US based Marriott ($750)
          Send night free coupon ($1800)
          Breakfast ($1500)

          Total easily quantified monetary benefit ($4050).

          Not bad for $75 and 15 minutes of my time.

          ________________
          Edited.

          But the ultimate discussion is a bit strained. The question is what is it worth to me. Perhaps not standing in a security line is worth money to you. I personally hate security lines. Perhaps you need the prestige of being greeted by name. Perhaps you like the upgrades. These are not quantifiable but still very real.

        2. It’s my money and I earned it. Who are you to tell me what I’m doing is bad? If I want to spend more money on a hotel chain because I like them so be it. How can that be bad?

          1. True – which is why clients may prefer a Ritz or Four Seasons – they know darn well it costs more, just like all that you get for that extra moolah. 🙂

  18. I have never heard the term Loyalty Programs in our business. We say frequent flyer program or frequent guest program or frequent rental program. We always recommend signing up and if you use it, great, if not, no biggie. If you do stay, fly or rent, there can be benefits. If the program changes, big deal. They are free to join and they are free to drop out of.

  19. I love a spirited debate, and I don’t mind having an opinion that’s outside the mainstream.

    Here’s the thing that’s being overlooked: Agree or disagree with me, at least we’re having the debate. It seems that pretty much everyone else has agreed that loyalty programs are “always” good and that you should “always” participate in one — and that, my friends, will always benefit corporate America, but not necessarily you, the consumer.

    Even if you think I’m wrong, you should be grateful that we’re having this discussion. Because no one else seems to be.

    Oh, and PS. How about those poll results? Carver, time to break out the Latin phrasebook?

    1. For me, this is another “Bridge To Nowhere”. He said she said, you think I think, I don’t and you won’t …

      Bottom line: if I’m even a little smart, the WORST that can happen is that I never see any benefit. Rather than being “good”, it’s really a “no harm, no foul”.

      And, if someone actually spends more with a company just to get the loyalty points/benefits, and then pays more in the end analysis that’s their problem. You’re not “rong” (intentional misspelling) Chris, but I do wonder what value this discussion has …

    2. Here you go 😛

      Argumentum ad populum.

      From Wiki. In argumentation theory, an argumentum ad populum (Latin for “appeal to the people”) is a fallacious argument that concludes a proposition to be true because many or most people believe it. In other words, the basic idea of the argument is: “If many believe so, it is so.”

      This type of argument is known by several names,[1] including appeal to the masses, appeal to belief, appeal to the majority, appeal to democracy, appeal to popularity, argument by consensus, consensus fallacy, authority of the many, and bandwagon fallacy, and in Latin as argumentum ad numerum (“appeal to the number”), and consensus gentium (“agreement of the clans”). It is also the basis of a number of social phenomena, including communal reinforcement and the bandwagon effect. The Chinese proverb “three men make a tiger” concerns the same idea.

    3. So what if it benefits the corporation. What is your hang up on that? They are providing a service, and if you use it or don’t no biggie. The chicken little approach isn’t working for me. I see the glass as half full and that consumers aren’t as stupid as you think.

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