Why I Left The Loyalty Business

I spent a decade selling and defining loyalty programs around the world. When it came time to leave my last gig two years ago, I didn’t reach out to a single loyalty services or technology firm. Why?

To answer that, you need to look at where the customer loyalty space had settled. Points programs, reward certificates, and credit card discounts were all fine tactics, but had become a way to cover deficiencies in the underlying product. Surly salespeople? Check. No differentiation? Check. Boring assortments? Check, check, check. While many consumer firms were trying desperately to improve the product as a whole, there was too much to overcome.

And overcoming Amazon was the problem. Its obvious in hindsight, but Amazon’s relentless investments in technology, iterative testing, and (most importantly) virtually infinite supply of capital meant most retailers were in a no-win situation. Once Amazon cracked next-day (and in some cases same day) delivery, the calculus of (get in car + drive + find parking + hope its in stock + wait in line + buy + drive home = have it today) vs. (take phone from pocket + search + click a couple of times = have it tomorrow) began to tilt away from physical retail.

For me, it was clear that loyalty would need to be earned, not bought. The most valuable brands understood that, and I no longer saw classic loyalty programs as a way to narrow the gap between strong brands and not-so-strong brands.

Fast forward to today. Few people shop for more than they need anymore. The US has about 23 square feet of selling space for every person in the country, vs. 4.6 for the UK and 2.4 for Germany (per Cowen and Company).

Table with gross leasable space by country
Selling Space Per Capita, from Cowen and Company via The Atlantic

Where “retail therapy” made sense in a world without smartphones and high-speed cellular connections, we are collectively finding more fulfillment in entertainment and experiences and stuff is just a commodity.

This is the future of customer loyalty, regardless of industry. Insanely focused on getting every detail right – not to differentiate, but just to keep up with industry standards and expectations. Crystal clarity on why your customers love you – the one thing bringing them back again and again. Then ensuring you carry that one thing throughout every interaction, every sentence of copy, every image, every employee, and every public utterance.

After nearly two years at Hedgehog, working with dozens of companies in many industries, I see this new model for customer loyalty everywhere. Not everyone has it nailed yet, but most have the right vision: find and ruthlessly eliminate all the stupid stuff that pisses customers off, then be better than everyone else at something they really, really care about. Fast service. Laser-focused assortment. Friendly, trustworthy, no BS doctors and staff. The best adhesives in the world. Plastics you didn’t know you needed until you needed 25 tons of it. And never, ever assume you’ve made it and can relax. Because someone else isn’t.