Blog

failure to launch a vintage style rocket.

Last month, a retail executive called me in a panic. "Our loyalty program is bleeding money,"&nbsp; he said. "But when we tried to scale it back, customers went nuclear on social media. Our NPS dropped 30 points overnight."I wasn't surprised. My spontaneous first thought? “I told you so.”Here's what happened: His company launched a points program that seemed simple. Spend €100, earn 100 points, and redeem for €3 rewards. Clean math, right?Wrong.Six months later, they realized they'd built a 3% discount system with 30% operational overhead that they could never, ever shut down. Welcome to the loyalty economics trap that quietly bleeds millions from retail balance sheets around the globe.<h3>The Seductive Lie Every Executive Believes </h3>Every loyalty program pitch starts the same way:"Customers will spend more, shop more frequently, and stay loyal longer. The program pays for itself through increased lifetime value."The CFO nods. The CEO approves. Marketing celebrates.The costs hit immediately:<ul><li>Technology platform: €50,000-500,000 setup</li><li>Point liability: Growing with every transaction</li><li>Customer service: Handling redemption complaints</li><li>Program management: Full-time team required The benefits? Always "coming next quarter." :)</li></ul><blockquote>Most point-based loyalty programs are expensive customer discounting systems disguised as strategic initiatives.</blockquote>After analyzing dozens of failed programs across retail, I've learned something painful: most loyalty points-based programs are expensive customer discounting systems disguised as strategic initiatives.<h3>Why Your Customers Will Never Let You Stop </h3>Here's the part no consultant tells you during the sales pitch: Once customers receive loyalty benefits, they become psychological owners of those benefits. This isn't my opinion. It's behavioral science.In Predictably Irrational, Dan Ariely shows that people hate losing something they have twice as much as they like gaining something new. Your loyalty program triggers what psychologists call the "endowment effect": customers begin treating earned points as their property, not your gift. I learned this the hard way during my time transforming loyalty at IKEA.Every program change, no matter how small, generated immediate customer revolt:<ul><li>"You're stealing from loyal customers!"</li><li>"This is a bait and switch!"</li><li>"I'm switching to your competitor!"</li></ul>We weren't stealing anything. We were optimizing a program that was hemorrhaging money. But try explaining that to a customer who feels you just took €50 from their wallet.The business reality: Loyalty programs are like government entitlements. Easy to create, but politically suicidal to remove.<h3>The €50M Mistake: Real Numbers from Real Companies </h3>Let me show you the hidden math that destroys most loyalty programs:Typical Program Economics:<ul><li>The customer spends €1,000</li><li>Earns 1,000 points (1¢ each)</li><li>Redeems 800 points for a €8 reward (80% redemption rate)</li><li>Program overhead: €2-3 (technology, service, management) Total cost: €10-11 for €1,000 in sales Translation: You're giving customers a 1% discount with a 25% operational markup.</li></ul>A simple 1% coupon would cost exactly 1% with zero overhead.But wait, it gets worse with&nbsp;compound damage:<ul><li>Customers delay purchases waiting for "bonus point" events</li><li>Your best customers become most price-sensitive (they learn to game the system)</li><li>You create liability that sits on your balance sheet</li><li>Every customer service call costs €15-25</li></ul>One major European retailer I consulted for spent €47 million on its loyalty program over a three-year period. Their incremental revenue? €12 million. They paid €47 million to generate €12 million. That's not marketing. That's financial suicide.<h3>The Three Warning Signs Your Program Is Doomed </h3>After auditing dozens of failing programs, I see the same pattern every time:Warning Sign 1: The Excitement Trap <ul><li>What you hear: "Customers love earning points!"&nbsp;</li><li>What it means: You're giving away margin for no real behavior change.</li></ul>Warning Sign 2: The Complexity Spiral <ul><li>What you hear: "We need to add tiers and bonus categories to increase engagement." </li><li>What it means: Your program doesn't work, so you're adding complexity instead of value.</li></ul>Warning Sign 3: The Metrics Mirage <ul><li>What you hear: "Program members spend 20% more!" </li><li>What it means: Your best customers joined your program. Correlation isn't causation.</li></ul><h3>The Psychology That Traps You Forever </h3>The scariest part isn't the money you lose. It's that you can never escape once you start.Try to reduce benefits, and customers revolt. Try to increase earning requirements, and they cry "devaluation." Try to shut down the program, and they switch to competitors.Remember JCPenney? Their attempt to eliminate complex loyalty promotions contributed to a 25% sales drop and cost the CEO his job.<h3>The Hard Questions Every Executive Must Answer </h3>Before you launch that loyalty program, honestly answer these questions:<ul><li>Can you monetize it externally? Do banks or partners want to buy your points?</li><li>Do you have adjacent services to cross-sell? Can loyalty drive revenue beyond core products?</li><li>Will customers pay upfront for benefits? Is your value proposition strong enough for paid membership?</li></ul>If you answered "no" to all three, don't launch a traditional points program. You're about to build an expensive discount system you can never shut down.<h3>The Bottom Line </h3>From time to time, I have the opportunity to speak with executives who have launched loyalty programs, believing they were investing in customer relationships. Instead, they built expensive customer entitlement systems that they can never escape.The hard truth: Most loyalty programs would be more profitable as simple discounts without the operational complexity.The strategic truth: Real loyalty comes from exceptional experiences, not accumulated points.The financial truth: Unless you can monetize externally, charge upfront, or cross-sell profitably, your loyalty program will slowly bleed your company dry.The psychological truth: Once you give customers something, taking it away feels like theft. Even when it's destroying your business.So, are you building customer loyalty or customer entitlement?

Launching a loyalty program is easy. Closing It Is Suicide

Mothers Talking at the Playground While Kids Play in Swings

Tony Hsieh, the late CEO of Zappos, once said something that should be etched into every marketing budget: "Customer acquisition costs are like taxes - you should avoid them by leveraging your Net Promoter Score."Most of the marketing teams I meet obsess over the same metrics: cost per acquisition, click-through rates, conversion funnels. They burn through budgets chasing new customers while completely ignoring the growth engine sitting right in front of them.Your existing customers.Not in some warm-and-fuzzy "retention is important" way. I'm talking about a mathematical reality that most executives miss entirely.Here's what I discovered during my time transforming customer experience at a major Global retailer: the experience you deliver today determines whether customers return next month. And return customers don't just buy more, they bring friends.This isn't marketing theory. This is how you engineer sustainable growth.<h3>The €50 Million Blind Spot </h3>Most retailers are sitting on a goldmine of customer intelligence, but they're completely blind to it. They know what people buy. They don't know why people come back.When I started working on loyalty strategy, I discovered something that shocked me: loyalty program members drove the majority of transactions and an overwhelming share of total revenue. Yet the company was treating the program like a discount mechanism instead of the revenue engine it actually was.The problem wasn't the loyalty program. It was that nobody understood what made customers return.Traditional retailers measure Net Promoter Score (NPS), get a number, file it in a dashboard, and hope for the best. That's not customer intelligence. That's measurement theater.<h3>What Actually Drives Repeat Behavior </h3>After analyzing thousands of customer interactions, I learned something that changed how I think about growth:<blockquote>Customers don't return because of your marketing. They return because of their last experience.</blockquote>The math is simple:<ul><li>Acquire Customer A for €50</li><li>Deliver an exceptional experience</li><li>Customer A returns organically (€0 acquisition cost)</li><li>Customer A refers Customer B (€0 acquisition cost)</li><li>Reinvest those €100 savings into even better experiences</li></ul>Every satisfied customer becomes a marketing channel. Every exceptional experience becomes an asset that keeps generating returns.<h3>The System That Changed Everything </h3>Working with cross-functional teams, we built what we call experience-driven growth: connecting customer satisfaction to operational reality in real-time.Instead of measuring satisfaction in isolation, we tracked:<ul><li>Which department customers were in when they rated their experience</li><li>How long did they spend in different areas of the store</li><li>Whether they used services like restaurants or customer support</li><li>Their complete journey across digital and physical touchpoints Then we connected every satisfaction score to the customer's complete profile.</li></ul>After someone rated their experience, we knew exactly where they were, what they did, and how that connected to their likelihood of returning.The breakthrough: We could finally see which operational decisions drove customer behavior.<h3>The Results Were Immediate </h3>This system transformed abstract satisfaction scores into surgical operational intelligence: a 34% increase in repeat visits within six months.But the real magic was in the insights:<ul><li>Store managers gained precision they'd never had: "NPS dropped in the bedroom department last week, what operational change happened there?"</li></ul><ul><li>Department teams could optimize in real-time: "Customers with kids who visit the playground score 2 points higher. I need to redesign family navigation throughout the store."</li></ul><ul><li>Operations discovered hidden value: "Customers who call customer service after visiting have 3x higher satisfaction, our problem resolution actually works, and should be expanded."</li></ul>We weren't just measuring satisfaction anymore. We were engineering it.<h3>Why This Works Across Industries </h3>This principle isn't retail-specific. Every industry has the same opportunity:<ul><li>Restaurants: Tonight's experience determines next month's booking. Yet most focus on Google ads instead of service quality.</li></ul><ul><li>SaaS companies: Onboarding experience drives renewal rates more than features. But they obsess over acquisition funnels instead of customer success.</li></ul><ul><li>Professional services: Last project delivery influences client expansion. Yet they chase new prospects instead of perfecting delivery.</li></ul>The pattern is universal: Companies that engineer exceptional experiences systematically don't just retain customers, they turn them into growth engines.<h3>The Three-Layer Growth Framework</h3>Layer 1: Acquisition - Traditional marketing brings first-time customersLayer 2: Experience - Product/service determines organic return likelihoodLayer 3: Intelligence - Data systems that show you exactly what drives behaviorMost companies only use Layer 1: The magic happens when you connect all three layers:<ul><li>Link satisfaction data to specific operational moments</li><li>Create feedback loops that reach people who can make changes</li><li>Reinvest acquisition savings into experience improvements</li></ul>This creates a compound effect: Better experiences → more returns → lower acquisition costs → budget for even better experiences.<h3>How to Implement This Today </h3>Start with one simple question: "What specific experience makes customers want to return?"Building experience-driven growth doesn't require a million-euro transformation. Most companies already have 80% of what they need. So start with what you have, then build as you learn:<ul><li>Marketing automation platform (for NPS surveys)</li><li>Basic customer database (names, emails, purchase history)</li><li>Point-of-sale system (transaction data)</li><li>Google Analytics (website behavior)</li></ul>The secret isn't a perfect data infrastructure. It's connecting the obvious dots first.Start Small: The 30-Day Discovery <ul><li>Week 1: Use your existing marketing automation to send post-purchase NPS surveys</li><li>Week 2: Export the responses and manually match them to customer purchase data</li><li>Week 3: Look for patterns - do customers who bought from specific departments score differently?</li><li>Week 4: Test one small change based on what you found</li></ul>Example: If customers who shopped kids' products score lower, walk through that department and see what's broken. Fix the obvious problems first. You'll learn more in 30 days of simple data matching than most companies learn in years of dashboard building.Build As You DiscoverOnce you find patterns that matter, gradually add complexity:<ul><li>Month 2: Connect NPS scores to specific store locations or website pages</li><li>Month 3: Add timing data - when did they shop, how long did they stay</li><li>Month 4: Start segmenting by customer type - new vs. returning, high vs. low value</li></ul>Each layer teaches you something new. Each discovery guides your next investment. The technology follows the insights, not the other way around. Don't build a Customer Data Platform because you think you need one. Build it because you've discovered specific patterns that require better integration.The Evolution: From Simple to Sophisticated As you discover what matters, your system naturally evolves:<ul><li>Phase 1 (Month 1): Start measuring with existing tools and manual data matching (NPS survey + manual Excel matching)</li><li>Phase 2 (Months 2-3): Connect the obvious dots and test simple improvements</li><li>Phase 3 (Months 4-6): Automate what you've proven works and add new data layers (e.g., automated survey triggering based on purchase behavior)</li><li>Phase 4 (Months 7-12): Build sophisticated integration only where you've discovered clear value (e.g., real-time satisfaction tracking connected to operational systems)&nbsp;</li></ul>The goal isn't building the perfect system from day one. It's learning what drives behavior and building only what you need. Netflix didn't start with their recommendation algorithm. They started by mailing DVDs and learning what customers actually wanted. Amazon didn't launch with one-day delivery. They started with books and gradually added complexity based on customer feedback.Your experience system should evolve the same way: start simple, learn constantly, and build incrementally.<h3>The Competitive Advantage Nobody Sees </h3>Here's the secret that many executives miss: while your competitors burn budget chasing new customers, you're building a system that creates customers for free.But more importantly, you're building something resilient that gets harder to replicate over time.<blockquote>Your competitors can copy your products. They can match your prices. They can even steal your people. But they can't copy years of customer behavior data and personalization algorithms that improve with every interaction.</blockquote>Every exceptional experience becomes an asset that generates returns for months or years. Every satisfied customer becomes a marketing channel that costs nothing to maintain. Every dollar saved on acquisition becomes a dollar invested in even better, more personalized experiences.This isn't just better business. It's sustainable competitive advantage built on customer intelligence.<h3>The Bottom Line </h3>After studying hundreds of growth initiatives, I've learned this: the companies with the strongest growth often have the simplest approach.They don't chase the latest marketing trend or optimization hack.They engineer exceptional experiences systematically, then let those experiences drive organic growth.Tony Hsieh was right about customer acquisition costs being like taxes. You should minimize them. But the best way to avoid them isn't just leveraging your Net Promoter Score. It's building the systems that show you exactly what makes customers want to return.The most overlooked growth channel isn't a marketing tactic. It's the experience you're delivering right now. Companies that master this don't just grow faster; they grow more profitably with sustainable competitive advantages their competitors can't replicate.

Last Customer Interaction Is Worth More Than Your Next Ad Campaign

Dear marketing world, we need to have an uncomfortable conversation about loyalty program greenwashing.You know that shiny new "behavior-driven rewards program" you just launched? The one that claims to reward "meaningful engagement" instead of just purchases? Let me guess… every single "meaningful behavior" you reward happens to drive your company's KPIs.That's not customer-centricity. That's manipulation with better branding.But before you get defensive, let's acknowledge something important: building genuinely customer-centric programs is hard. Really hard. And not every business needs to transform customers' lives. Sometimes people just want their coffee fast or their software to work reliably.The question isn't whether you should abandon business metrics. It's whether you can align them with what customers actually value.<h3>The Great Rebranding Scam</h3>Somewhere along the way, marketers realized customers were getting tired of "spend money, get points." So they pivoted to "engage with our brand in these 47 specific ways that boost our metrics, get points." They slapped "behavior-driven" and "engagement-focused" labels on programs that are still fundamentally designed around company goals, not customer problems.Examples of loyalty program greenwashing:<ul><li>"We reward you for writing reviews!" (Translation: We need user-generated content)</li><li>"Get points for social sharing!" (Translation: We need free marketing)</li><li>"Bonus points for app engagement!" (Translation: We need to boost daily active users for investors)</li><li>"Rewards for completing your profile!" (Translation: We need your data for targeting)</li></ul>Every behavior benefits the company first, customer second.<h3>The Fundamental Truth Most Programs Miss</h3>Here's what these programs get backward: Your revenue is only as big as the value your customers create.When customers succeed, when they become healthier, wealthier, more skilled, and happier, they have more capacity to invest in solutions that help them succeed even further. When they fail, they retreat, cut spending, and look for cheaper alternatives.Most loyalty programs are designed around extracting immediate value FROM customers instead of creating lasting value FOR them. That's not just questionable. It's economically backwards. The dollars should be the outcome of customer success, not the goal that comes at customer expense.<h3>What Success Looks Like Across Different Business Models</h3>Not every business needs to transform lives, and that's perfectly fine. The key is understanding which of three relationship types your customers actually want from you—then designing rewards that genuinely support that relationship.<ol><li>Transformational relationships exist where customers seek meaningful personal or professional change. They want to become healthier, smarter, wealthier, or more capable. Success here means measurable progress toward life goals.</li><li>Capability-building relationships focus on helping customers become more effective at specific skills or processes. Customers want to get better at their jobs, master new tools, or optimize their workflows. Success means increased competence and confidence.</li><li>Transactional relationships prioritize efficiency, convenience, and reliability. Customers want fast, easy, consistent experiences without friction. Success means saving time, reducing hassle, and delivering predictable quality.</li></ol>Here's how each approach creates genuine value:<ul><li>Transformational Relationships: Where Life Change Is the Goal<ul><li>Duolingo rewards actual language learning progress. Users with a 7-day streak are 3.6 times more likely to complete courses.</li><li>Vitality Health Insurance reduces premiums by up to 40% when members get healthier. Research shows members live up to 5 years longer.</li><li>Debbie App rewards debt elimination and credit improvement. They celebrate when customers achieve financial independence.</li></ul></li></ul><ul><li>Capability Building: Where Skills Drive Success<ul><li>Salesforce Trailhead helps customers achieve first-value milestones 40% faster through structured onboarding and certification paths. Companies with certified users show higher platform adoption and expansion rates.</li><li>HubSpot focuses on customer outcome achievement, though specific expansion metrics aren't publicly available. Their customer success methodology emphasizes results over usage metrics.</li></ul></li></ul><ul><li>Transactional Excellence: Where Efficiency Rules<ul><li>Starbucks rewards frequency and convenience, exactly what customers want from their coffee routine.</li><li>Amazon Prime rewards fast shipping, easy returns, and seamless purchasing. The transformation here is operational efficiency, not personal development.</li></ul></li></ul><h3>The Practical Implementation Framework</h3>Step 1: Identify Your Relationship TypeBefore designing any program, honestly assess what customers want from you:Transformational relationships exist where customers seek meaningful change. Think education, health, finance, and career development. Here, you should reward progress toward customer goals, even if it doesn't immediately benefit quarterly metrics.Capability-building relationships exist where customers want to become more effective at specific skills or processes. Think B2B software, professional tools, and platforms. Here, reward mastery, competence, and productivity gains.Transactional relationships exist where customers want efficiency, convenience, and reliability. Think utilities, basic services, everyday purchases, and entertainment. Here, reward the experiences customers value most.&nbsp;Step 2: Apply the Growth Alignment TestAsk yourself: If your customers achieved their biggest goals related to your category, would they spend more with you or less?<ul><li>If customers became financially successful, would they buy more financial services or fewer?</li><li>If customers became extremely healthy, would they invest more in wellness or less?</li><li>If customers became highly skilled, would they spend more on development or less?</li></ul>If the answer is "more," your loyalty program should reward progress toward those goals. If the answer is "less," focus on efficiency and satisfaction rather than transformation.Step 3: Balance Short-term and Long-term NeedsReal businesses can't ignore quarterly results while waiting for customer transformation to pay off. Use a portfolio approach:<ul><li>Immediate rewards for behaviors that benefit both parties right now (purchases, referrals, efficient service usage) </li><li>Progress rewards for advancement toward customer goals (skill building, health improvements, financial progress)</li><li>Milestone rewards for major customer achievements (course completion, fitness goals, debt payoff)</li></ul>Step 4: Measure What Matters to Customers<ul><li>For transformational relationships: Track leading indicators of customer capability and life outcomes.<ul><li>A fitness app might measure workout consistency and strength gains, not just app opens.</li><li>A financial app should track debt reduction and savings growth, not just login frequency.</li></ul></li></ul><ul><li>For capability-building relationships: Track competence, efficiency, and mastery metrics.<ul><li>A cloud storage service might measure successful file recovery rates and collaboration effectiveness.</li><li>A CRM platform should track sales team performance improvements and deal closure rates, not just feature usage.</li></ul></li></ul><ul><li>For transactional relationships: Track satisfaction, convenience, and reliability metrics.<ul><li>A coffee shop should measure order accuracy and wait times.</li><li>A streaming service might measure content discovery success and viewing satisfaction, focusing on how well it delivers the entertainment experience customers want.</li></ul></li></ul><h3>The Economics of Customer-Centricity: What the Data Shows</h3>The ROI of Customer Success Alignment:<ul><li>25% profit increase from just 5% retention improvement (Bain &amp; Company)</li><li>- 1.7x faster revenue growth for top customer experience performers (McKinsey)</li><li>26% higher profit margins for CX leaders vs. laggards (Forrester)</li><li>117% net revenue retention for companies using customer success platforms (Gainsight)</li></ul>Verified Success Examples:<ul><li>Duolingo: Users with 7-day streaks are 3.6x more likely to complete courses</li><li>Salesforce: Structured onboarding helps customers achieve first-value milestones 40% faster</li><li>Customer Success Platform Users: Average 117% net revenue retention vs. industry benchmarks</li></ul><blockquote>The pattern is clear: when customers achieve meaningful outcomes, companies see measurable business impact.</blockquote><h3>Common Implementation Challenges and Solutions</h3><ul><li>We can't measure customer success in our industry</li></ul>Start with proxy metrics. A B2B software company might track whether customers achieve their stated goals with the product, use key features effectively, and report satisfaction with results. For retail, measure repeat purchase patterns, category expansion, and customer satisfaction scores.<ul><li>Our executives need short-term results</li></ul>Use a staged approach backed by data. McKinsey research shows that top customer experience performers grow 1.7x faster than peers, while Bain data demonstrates that even a 5% retention improvement drives 25% profit increases. Build the business case gradually with measurable experiments.ROI Timeline for Customer-Centric Programs: Months 1-3: Baseline measurement and pilot launch - Months 4-6: Early indicators (engagement quality, satisfaction scores) - Months 7-12: Financial impact becomes measurable (retention, expansion rates) - Year 2+: Full ROI realization (lifetime value, referral revenue)Our customers don't want transformation, they just want conveniencePerfect! Reward convenience. Make their lives easier, faster, more reliable. Customer-centricity doesn't require life transformation, it requires alignment with what customers actually value.This sounds expensive and complexStart simple with measurable impact. Salesforce data shows that structured customer onboarding helps achieve first-value milestones 40% faster. Same program mechanics, different focus on customer outcomes. You don't need to revolutionize everything at once, but you do need to measure what matters to customers.<h3>The Real Test</h3>Want to know if your loyalty program is authentic? Apply this simple filter:Would you be genuinely excited to tell your best friend about the rewards you're offering, knowing they're not a customer and you won't benefit from their participation?If yes, you're probably on the right track. If no, you might be rewarding behaviors that primarily serve your interests, not theirs.<h3>The Bottom Line</h3>The most successful companies are realizing that genuine customer-centricity isn't just morally better; it's also a better business strategy. But "customer-centricity" doesn't mean every relationship needs&nbsp;

The Loyalty Program Paradox: How to Reward Customers Without Using Them

Closeup shot of beautiful young woman happily laughing

Two companies launch on the same day. Same market. Same budget. Same smart people. Company A hires the best engineers, builds the most features, and launches with 47 different product configurations. Their pitch deck is flawless. Their demo is impressive. Their investors are excited. They aren't stupid, they're brilliant builders with deep technical expertise. But they forgot to ask the right question.Company B asks a different question: "What value exchange do our customers actually want?" They discover that people don't want 47 options. They want one option that creates ongoing mutual value. While Company A was perfecting feature #37, Company B was designing something far more powerful: a self-reinforcing loop where every customer interaction made both sides more successful.Six months later, something happens. Company A's customers buy once and disappear. Company B's customers start coming back. Not just to purchase, but to share insights, ask questions, and recommend the product to colleagues. The difference? Company B had cracked the code that Company A never even knew existed.Guess which one discovers the secret to sustainable growth?<h3>The Value Exchange That Changes Everything</h3>While Company A was adding features, Company B was building something entirely different: a self-reinforcing loop where every customer interaction created more value for everyone involved.<figure id="figure-1aqq6353ucmcc0yegv"><img id="1aqq6353ucmcc0yegv" src="https://cdn.durable.co/blocks/1ctiDrrTDHLwvKRmybp4K3SzcIU66ecNeM7DTbrPvsvAlDlXNIy4qw13jsiMtzRV.png" alt="" title="" class="object-cover bg-gray-100 " style="aspect-ratio: 16/9; object-position: center center;" data-corners="default" data-aspect="16:9" data-caption="" data-positionx="undefined" data-positiony="undefined" data-fullwidth="false" data-mce-src="https://cdn.durable.co/blocks/1ctiDrrTDHLwvKRmybp4K3SzcIU66ecNeM7DTbrPvsvAlDlXNIy4qw13jsiMtzRV.png" data-mce-style="aspect-ratio: 16/9; object-position: center center;"></figure>Here's how it worked:<ul style="list-style-type: square;" data-mce-style="list-style-type: square;"><li>Step 1: Relevance Creates Connection</li></ul>Instead of building what they could, Company B focused obsessively on what customers actually needed in their specific life situations. This relevance wasn't just nice to have. It was the foundation of everything that followed.<ul data-mce-style="list-style-type: square;" style="list-style-type: square;"><li>Step 2: Value Drives Engagement</li></ul>When customers found genuinely relevant solutions, something powerful happened: they willingly shared more information about their needs, challenges, and goals. This wasn't forced data collection—it was natural engagement born from mutual value.<ul style="list-style-type: square;" data-mce-style="list-style-type: square;"><li>Step 3: Data Unlocks Deeper Understanding</li></ul>Every engaged interaction generated behavioral insights that Company B's competitors could only guess at. They learned not just what customers bought, but why, when, and how they used it in their real lives.<ul style="list-style-type: square;" data-mce-style="list-style-type: square;"><li>Step 4: Understanding Builds Brand Love</li></ul>Armed with deep customer insights, Company B could anticipate needs, solve emerging problems, and create experiences that felt almost magical in their relevance. This wasn't just satisfaction—it was genuine affection.<ul style="list-style-type: square;" data-mce-style="list-style-type: square;"><li>Step 5: Love Generates Sales</li></ul>Customers who felt understood didn't just buy—they bought more, stayed longer, and brought friends. Sales became less about convincing and more about serving people who already trusted the brand.<ul style="list-style-type: square;" data-mce-style="list-style-type: square;"><li>Step 6: Sales Fund Better Relevance</li></ul>Revenue from loyal customers funded deeper research, better solutions, and more personalized experiences, making the entire loop stronger and more valuable for everyone.<h3>The Flywheel in Action: Real-World Value Exchanges</h3>This pattern isn't theoretical. It's how the most successful companies actually grow:<ul style="list-style-type: square;" data-mce-style="list-style-type: square;"><li>Slack's Communication Value Exchange</li></ul> Slack didn't just build chat software. They built a value exchange around effortless team communication. According to verified data, teams using Slack reduce emails by 32% and meetings by 27%. When teams experienced this efficiency value, they naturally shared more about their workflows and communication patterns through usage data. This behavioral intelligence helped Slack anticipate team needs and create features that felt intuitive. With 10 million daily active users and over 600,000 organizations by the time of their 2019 IPO, the value exchange created organic growth that competitors struggled to replicate.<ul style="list-style-type: square;" data-mce-style="list-style-type: square;"><li>ASOS' Style Discovery Value Exchange </li></ul>ASOS transformed online fashion retail by building a data-powered value exchange around personalized style discovery. Instead of pushing generic campaigns, ASOS encourages shoppers to create style profiles, wishlist items, leave reviews, and use tools like "Style Match" for visual search. In return, customers receive tailored recommendations and curated content that reflects their preferences. With 23 million active users and £3.54 billion in revenue, ASOS has become one of the UK's largest online fashion retailers. The platform's focus on understanding individual style preferences has created strong customer engagement, though specific conversion metrics remain proprietary to the company.<ul style="list-style-type: square;" data-mce-style="list-style-type: square;"><li>Canva's Creative Empowerment Value Exchange </li></ul>Canva didn't win by offering generic design tools. They created a platform where users could solve real-life design problems immediately, often for free. In return, users shared data on design preferences, industries, team structures, and content formats through every design choice they made. This insight enabled Canva to recommend relevant templates, automate brand kits, and roll out team-based collaboration features, systematically converting solo users into business subscribers. With over 220 million monthly active users as of 2024 and adoption by 95% of Fortune 500 companies, Canva has reached $3 billion in annualized revenue. The company's success stems from turning every design click into behavioral intelligence and every insight into a more intuitive, relevant creative experience.<h3>Why Traditional Companies Miss the Exchange (And When Features Actually Matter)</h3>Most businesses view customer relationships as linear transactions: create a product → market the product → sell the product → provide support for the product. This transactional thinking misses the exponential power of value exchanges.But let's be honest about the real-world complexity: sometimes features genuinely drive competitive advantage. When Notion introduced its block-based editor and Figma enabled real-time collaboration, those capabilities created immediate market differentiation. The key distinction is whether features solve core customer jobs or just add complexity.The challenge for leadership teams is balancing short-term revenue pressures with long-term exchange-building. A SaaS company might need to ship features to hit quarterly targets while simultaneously investing in customer research systems that won't show ROI for 18 months. The companies that master this balance understand that sustainable growth requires both tactical execution and strategic relationship-building.The winning companies recognize that every customer interaction is actually three things simultaneously:<ul style="list-style-type: square;" data-mce-style="list-style-type: square;"><li>An opportunity to deliver relevant value (solving immediate needs)</li><li>A chance to learn something new about customer needs (building intelligence)</li><li>A moment to strengthen the relationship for future exchanges (creating stickiness)</li></ul>When you optimize for all three instead of just the immediate sale, you create what economists call "increasing returns"; each interaction makes the next one more valuable for both parties.<h3>The Competitive Moat That Can't Be Copied</h3>Here's what makes the value exchange model so powerful: competitors can copy your features, match your prices, and even hire your people. But they can't copy the relationship data and behavioral insights you've built with customers over time.Every cycle of the value exchange creates:<ul style="list-style-type: square;" data-mce-style="list-style-type: square;"><li>Deeper customer understanding that informs better solutions</li><li>Stronger emotional connections that drive organic advocacy</li><li>More predictable revenue streams that fund continued innovation</li><li>Behavioral data that becomes increasingly valuable over time</li></ul>While competitors are guessing what customers want, companies with strong value exchanges know. While others chase yesterday's trends, they're anticipating tomorrow's needs.<h3>Building Your Own Value Exchange</h3>The most successful value exchanges don't happen by accident. They require intentional design around three core principles:<ol style=""><li>Start with Real Relevance. Ask not "What can we build?" but "What specific life situation are we improving?" The more precisely you understand the context where customers need value, the more willing they'll be to engage in an ongoing exchange relationship.</li><li>Design for Data Partnership. Create natural reasons for customers to share information that helps you serve them better. This isn't surveillance—it's collaborative problem-solving where both sides benefit from better understanding.</li><li>Invest in Relationship Infrastructure. Build systems that capture behavioral signals, translate insights across your organization, and turn learning into better customer experiences. The companies that master this create advantages that compound for decades.</li></ol><h3>The Question Every Leader Should Ask</h3>So here's the blind spot that separates winners from feature-factories:<blockquote>Are you building transactions or value exchanges?</blockquote>Because in a world where everyone can build impressive features, the only sustainable advantage is creating genuine value loops where customers want to participate in building better solutions together.The companies that get this don't just win customers—they create advocates who become part of their competitive advantage. And that's how you build something that lasts: not through better features or lower prices, but through value exchanges that make everyone involved more successful over time.What value exchange are you building with your customers? If you don't know, your competitors might be designing one first.

Value Exchange: Turn Customers Into Growth Partners

Mature man standing among the produce aisle at the supermarket and feeling upset about the increase in food prices.

You spend 20 minutes trying to redeem points, only to hit hidden fees, expired terms, and a maze of apps. Frustrated, you mutter something under your breath.That dirty F-word? It might be one of the seven Dirty F-Words quietly killing loyalty programs around the world. After studying loyalty failures, from startups to global giants, I've found a disturbing pattern: Seven words. All starting with the same letter. All showing up in the complaints, the cancellations, the churn.They sound harmless in a boardroom. However, in the real world, they undermine trust, engagement, and billions of dollars in loyalty investment. Once you spot them, you can't unsee them. Let's break them down.<h3>Dirty F-Word #1: The Profit Killer — FREE</h3>It sounds generous. It looks attractive in marketing. But "FREE" is one of the fastest ways to destroy both profitability and customer trust.The problem? Once you give something for free, it's nearly impossible to take it back. You don't just give a gift. You create a permanent expectation."Free" becomes the baseline. And anything less than free? Feels like a loss. That free delivery? Now "standard." That free product bonus? Now owed. That free reward? Now demanded.It's a psychological and financial trap. You're not building loyalty. You're spoiling your customers. And eventually, when budgets tighten or policies change, the very thing you gave away becomes the reason customers leave.I've seen brands collapse their margins chasing "free." And when they try to scale it back? The backlash is worse than if they'd never offered it at all. <blockquote>Free isn't free. It's a cost you carry long after the campaign ends.</blockquote>Audit your program: Where are you giving away value without a clear exchange? If customers aren't earning it, they'll stop valuing it and start expecting it forever.<h3>Dirty F-Word #2: The Silent Saboteur — FRAUD </h3>Here's the uncomfortable truth: If your loyalty program holds value, someone will try to exploit it.Fraud isn't a risk. It's a guarantee. And it doesn't just come from organized cybercriminals. It often comes from much closer sources: employees, partners, franchisees, and even agencies.Research shows that loyalty program fraud has risen by 89% in recent years, with 72% of loyalty managers reporting fraud experiences. The Loyalty Security Association estimates that $3.1 billion in redeemed loyalty points are fraudulent annually.I've seen:<ul><li>Store staff issuing points to fake accounts to claim referral bonuses</li><li>Call center agents quietly override rules to favor friends or resell rewards</li><li>Marketing teams are creating promo codes with zero controls or expiry logic</li><li>Backend systems without redemption velocity monitoring, opening the door to abuse</li></ul>These aren't rare edge cases. They're baked into the system unless you design against them from the start.Take the case of a global retail brand that ran a limited-time "triple points" event. Within 48 hours, 11% of all transactions were flagged as "suspiciously optimized." Most weren't cyberattacks. They were loopholes exploited by staff who had insider knowledge of the system.<blockquote>Loyalty currencies are like real money—if they're not secured, they will be stolen.</blockquote>Audit your program:<ul><li>Can your system detect redemption anomalies in real time?</li><li>Do you audit staff behavior and partner access regularly?</li><li>Is fraud prevention a core feature of your loyalty architecture, or just a line item in legal?</li></ul>If the answer is no, you're not unlucky. You're unprepared.<h3>Dirty F-Word #3: The Invisible Threat — FORGETTABLE </h3>The most dangerous loyalty programs aren't the ones customers hate. They're the ones they forget. They sit quietly in digital wallets, never opened. They collect dust in inboxes, never clicked. They blend into the background, generic, transactional, lifeless. And here's the real problem: You're not just competing with loyalty programs in your category. You're competing with every loyalty experience your customer has ever had. If a customer uses Uber Rewards, Starbucks Stars, or Amazon Prime, their expectations don't stay in those silos. They carry over to your brand, even if you sell dishwashers or insurance. Consumers don't compartmentalize loyalty. They compare it. That means your program can't just be "functional." It has to be memorable, because you're trying to build a relationship that lasts years, not weeks. Forgettable programs fail because they:<ul><li>Copy and paste the same old points-for-purchase model</li><li>Don't reflect the brand's voice, values, or experience</li><li>Offer no emotional hook, no personal relevance, no reason to return</li></ul><blockquote>If your loyalty program were to disappear tomorrow, would anyone notice? </blockquote>Audit your program: Remove your logo and colors from your program materials. Would anyone still recognize it as yours? If not, you're forgettable. And that means you're replaceable.<h3>Dirty F-Word #4: The Relationship Wrecker — FORCED </h3>Some loyalty programs don't feel rewarding. They feel like work. They ask customers to scan QR codes, download yet another app, fill out surveys, or follow a maze of qualification rules just to earn the basics. This isn't loyalty. It's a chore list disguised as engagement.And here's the real problem: These hoops rarely exist for the customer's benefit. They exist to solve your business problems. Want more app installs? Tie rewards to app usage. Want more survey data? Force it as a condition to earn points. Want more social reach? Make sharing on Instagram part of the redemption flow. But loyalty isn't built on what you need. It's built on solving what they need. When you force behaviors that don't match how customers naturally engage with your brand, you're not building loyalty. You're building resistance. Take the case of a quick-service chain that linked its program to receipt uploads, survey completions, and mandatory app downloads. It looked good in internal KPIs. But customers hated it. Engagement dropped by double digits over the past 90 days. The program was shut down quietly within a quarter. Here's the hard truth: No one wants to work harder just to be loyal. <blockquote>If your program feels like a test, your customers will fail it. On purpose. </blockquote>Audit your program: Would your best customer behave this way if the program didn't exist? And more importantly, are you designing for your needs, or theirs? If you're forcing it, you're not driving loyalty. You're draining goodwill.<h3>Dirty F-Word #5: The Silent Exit — FATIGUE </h3>Your program isn't just competing for share of wallet. It's competing for share of mind. And your customers? They're tired. Research shows that the average US consumer belongs to more than 15 loyalty programs. A 10% increase from just 2022. They juggle dozens of apps, multiple reward currencies, and endless promo emails. Your beautifully designed program isn't landing in a vacuum. It's landing in a brain that's already overloaded. Loyalty fatigue doesn't happen because customers don't care. It happens because they no longer have the capacity to care. One global apparel brand added a three-tier bonus system, limited-time point boosters, and a separate referral currency. All in the name of gamification. On paper? More engagement opportunities. In reality? Drop-offs increased. Customers tuned out. Why? Because the mental cost of participating started to outweigh the value of belonging. <blockquote>Complexity disguised as innovation is still complexity. </blockquote>Audit your program: Can your customer explain your program in one sentence? If not, you're not delighting them—you're draining them. And in a world of too many programs and too little attention, that's a fast track to irrelevance.<h3>Dirty F-Word #6: The Loyalty Killer — FRUSTRATION </h3>Not every loyalty failure starts with betrayal. Some start with a spinning wheel, an expired link, or a support ticket that goes unanswered. And just like that, months of goodwill vanish in seconds. When your program creates frustration, it doesn't just cost a redemption. It costs the relationship. Customers don't separate your loyalty program from your brand. If something breaks, feels unfair, or doesn't work when it should, they don't blame the system—they blame you. Loyalty is emotional. So when things go wrong, the damage feels personal. Frustration comes in many forms: <ul><li>Points that disappear without notice</li><li>Rewards that are always "out of stock"</li><li>T&amp;Cs that change mid-promotion</li><li>Customer service teams that can't resolve loyalty issues </li></ul>Research shows that 33% of consumers will leave their favorite brands when offered irrelevant rewards and promotions. One beauty retailer ran a limited-time offer for loyal members, but the reward portal crashed under load, and redemptions failed. Instead of driving engagement, the campaign sparked hundreds of angry social posts and a measurable dip in repeat purchases. <blockquote>Frustration isn't just a moment. It's a withdrawal from the emotional bank account you've spent years building. And most brands never recover the balance. </blockquote>Audit your program: Are customers reaching out more about loyalty issues than product ones? If so, your program isn't creating value—it's creating friction. And friction leads to exit.<blockquote>Dirty F-Word #7: The Innovation Killer — FLAT </blockquote>Some loyalty programs don't fail loudly. They fail quietly by staying exactly the same while everything around them changes. No new benefits. No response to shifting customer needs. No evolution in how the program fits into the customer journey. Just the same tired points-for-purchase structure… year after year. Flat programs aren't broken. They're boring. And boring is a death sentence in a world full of exciting alternatives. Your customers are constantly being reconditioned by brands that evolve faster, offering more relevant, more convenient, more personalized experiences. If your program still looks like it did three years ago, your most loyal customers have likely already moved on. Even if they haven't formally opted out. One electronics brand launched a tiered rewards system in 2019. It had a strong initial lift but made zero meaningful updates in the years that followed. Meanwhile, competitors introduced app integrations, instant cashback, and dynamic rewards. By 2023, the once "premium" loyalty experience was dead weight. Its active user base had shrunk significantly. <blockquote>Because loyalty is not a set-it-and-forget-it initiative, it's a living system that must adapt. Or decay. </blockquote>Audit your program: When was the last time your program introduced a meaningful new feature, benefit, or experience? If the answer is, "we can't remember," your customers already have.<h3>The Dirty F-Words Audit: Is Your Program Infected? </h3>Here's your loyalty gut check: <ul><li>FREE – Are you creating expectations you can't sustainably meet, or worse, training customers to expect something for nothing?</li><li>FRAUD – Is fraud prevention built into your program design, or are you waiting to react once damage is done?</li><li>FORGETTABLE – Would customers miss your program if it disappeared tomorrow, or have they already tuned it out?</li><li>FORCED – Are you solving your business problems at the cost of creating customer friction?</li><li>FATIGUE – Is your program simple enough to be remembered and used, or has it become mental clutter?</li><li>FRUSTRATION – Are loyalty issues generating more complaints than they're preventing?</li><li>FLAT – Has your program meaningfully evolved in the last 12–18 months, or are you just maintaining what once worked? </li></ul>If you feel even a slight discomfort reading that list… your program might already be infected.<h3>The Choice That Defines Your Program's Future </h3>The best loyalty programs don't avoid these dirty F-words by luck. They design against them: intentionally, strategically, and continuously. Because in a world of too many options and too little patience, loyalty isn't something you buy. It's something you earn, interaction by interaction, experience by experience. So here's your final test: Would you recommend your loyalty program to your best friend? If you hesitate, even for a second, your customers already have their answer.You've seen the dirty F-words. Now it's your move. Source Note: This analysis combines published industry research with observations from loyalty program case studies. External statistics are cited where available, while specific company examples are anonymized for confidentiality. Readers should consider this informed industry perspective rather than peer-reviewed academic research.

The Seven F-Words Secretly Destroying Your Loyalty Program

<h2> A marketer's guide to the fine line between authentic personality and performative relatability</h2>TL;DR: Stop Making Your Brand Everyone's BFF<ul><li style="list-style-type: none;" data-mce-style="list-style-type: none;"><ul><li style="">Many brands are forcing fake intimacy (like utility companies saying "we miss you") instead of being authentic. Duolingo's guilt-tripping works because it serves their actual purpose - habit formation. But most brands adopting quirky personalities just seem desperate.</li></ul></li></ul><ul><li style="list-style-type: none;" data-mce-style="list-style-type: none;"><ul><li>The authenticity test: Does your brand voice serve your core function, or are you just afraid of being "boring"?</li></ul></li></ul><ul><li style="list-style-type: none;" data-mce-style="list-style-type: none;"><ul><li style="">Bottom line: Consumers want genuine value, not emotional manipulation. Your electricity company doesn't need to be your friend—it needs to keep your lights on. That's not boring, that's authentic.</li></ul></li></ul><ul><li style="list-style-type: none;" data-mce-style="list-style-type: none;"><ul><li style="">Save the personality for brands where emotions actually belong. For everyone else, being professionally excellent beats forced relatability.</li></ul></li></ul> Last week, I received a notification from my electricity provider: "We miss you! 😢 Don't forget to check your energy usage this month." As a marketer, my first thought wasn't about my electricity bill. It was about the uncomfortable disconnect between the message and the messenger. Here was a utility company, whose relationship with me is purely transactional, trying to sound like a worried friend.This got me thinking about a phenomenon I see everywhere in marketing: brands desperately trying to be your best friend, often with cringeworthy results.<h3>The Duolingo Effect: When "Trying Too Hard" Actually Works</h3>We've all seen Duolingo's passive-aggressive notifications. The green owl guilt-trips you, threatens your family, and somehow makes language learning feel like you're disappointing a needy friend. And it works brilliantly. Why? Because it's authentic to what Duolingo actually is: a gamified learning app that depends on habit formation. The guilt-tripping aligns perfectly with their product strategy. They need you to come back daily, and the "pushy friend" persona serves that functional purpose.<blockquote>Duolingo's success has spawned countless marketing case studies about "being relatable" and "showing personality." But here's what most miss: it's not about the personality itself. It's about authenticity to your brand's core function.</blockquote><h3>The Problem with Parasocial Branding</h3>What we're witnessing is the rise of "forced intimacy" in brand communication. Companies are adopting overly personal and emotional language to create an artificial sense of closeness with consumers. My electricity provider's "we miss you" message is a perfect example.The psychology behind this is sound: research from the Institute of Practitioners in Advertising shows emotional campaigns perform 2x better than rational ones, and Broadridge's 2024 consumer insights found 71% of consumers expect personalized interactions. But there's a critical difference between personalization and forced intimacy.<h3>When "Boring" Brands Get It Right</h3>Sometimes the most effective emotional communication comes from brands you'd least expect. Take ING Bank's mental health campaigns during the pandemic. They provided genuine financial wellness resources without trying to be your therapist. Or Maersk's LinkedIn presence, which combines shipping industry expertise with authentic behind-the-scenes content from their crews.These examples are effective because the emotional element serves a genuine customer need, rather than merely trying to grab attention. ING's mental health focus addressed real customer anxiety about finances, while Maersk's human stories help demystify global logistics.<h3>The Authenticity Test: Four Questions Every Marketer Should Ask</h3>Before your brand tries to be anyone's friend, ask yourself:1. Does this personality serve our core function? Duolingo's pushiness supports habit formation. Ryanair's sarcasm aligns with their budget, no-frills positioning. What does your "personality" actually accomplish?2. Would this communication feel natural coming from us? A utility company that expresses emotional attachment may feel manipulative because the relationship is inherently transactional. A fitness app that encourages you to feel natural because motivation is part of the service.3. Are we solving for the customer or our own insecurities? Many brands adopt quirky personas because they're afraid of being "boring." But boring can be exactly what customers want from certain services.4. Can we sustain this authentically? Effective personal communication requires a consistent tone, clear crisis management protocols, and team alignment. Are you prepared for the work it takes to maintain a "personality"?<h3>The 80/20 Rule for Professional Brands</h3>Research from successful personal brand campaigns reveals a critical framework: 80% value-driven content, 20% personal elements. Taylor &amp; Francis' research on brand anthropomorphism supports this ratio across industries, helping brands stay human without overstepping. For B2B brands especially, thought leadership and expertise should dominate your communication, with personality as a supporting element, not the main attraction.<h3>Industry-Specific Realities</h3>Regulated industries (finance, healthcare, utilities) face additional constraints. Your fiduciary responsibility often conflicts with being anyone's "friend." Trust and reliability matter more than relatability. B2B brands succeed with professional insights and industry expertise, rather than relying on lifestyle content or emotional manipulation. Consumer brands have more flexibility, but even they must ensure that personality serves a purpose.<h3>What This Means for Your Marketing Strategy</h3>The next time you're tempted to make your brand sound like everyone's best friend, remember my electricity provider. Instead of asking "How can we be more relatable?" ask:<blockquote>What authentic value do we provide? How can our communication support that value? What would feel genuine coming from us?</blockquote>The most successful "personal" brands aren't trying to be your friend—they're being the best version of what they are.Duolingo isn't successful because it has personality; it's successful because its personality serves its purpose. The guilt-tripping works because consistent practice is genuinely what users need from a language app. Your electricity provider doesn't need to miss me. It needs to keep my lights on and my bills transparent. That's not boring. That's authentic. If you're responsible for brand voice, now's the time to audit your tone. Are you offering emotional connection, or emotional confusion?<h3>The Bottom Line</h3>In our rush to humanize brands, we risk forgetting that authenticity matters more than personality. Consumers don't want forced intimacy; they want genuine value delivered in a way that feels natural to the relationship. Save the emotional manipulation for brands where emotions belong. For everyone else, being professionally excellent is more than enough.What's your take? Have you noticed the rise of "forced intimacy" in brand communication? Share your thoughts below, and please, no utility companies telling me they miss me in the comments.

Brand Intimacy: Why Duolingo's Guilt Works, Others Don't

Adam Nowak Customer Loyalty

Turn customer challenges into opportunities with practical insights on CRM, engagement, and loyalty from Adam Nowak, Customer Loyalty Expert.  

Mulish

Raleway

Rubik

Merriweather

🍪🍪🍪 This site uses cookies to improve your experience and analyze how you interact with our website. By clicking "Accept", you consent to our use of analytics cookies.

Adam Nowak

Blog

Launching a loyalty program is easy. Closing It Is Suicide

Last Customer Interaction Is Worth More Than Your Next Ad...

The Loyalty Program Paradox: How to Reward Customers With...

Value Exchange: Turn Customers Into Growth Partners

The Seven F-Words Secretly Destroying Your Loyalty Program

Brand Intimacy: Why Duolingo's Guilt Works, Others Don't