Marketing idea: The Disloyalty Card

Umair Haque’s New Capitalist Manifesto inspired me to think of a little idea for a restaurant loyalty card. The idea would probably work in other industries too.

It uses Google-inspired logic. For example, Google make it very easy to take your data out of GoogleDocs and import it elsewhere. Unlike Microsoft with its archaic proprietary formats, Google never try to keep anyone as a customer by locking them in. Clearly this benefits the customer, but it’s also to Google’s advantage too. It forces them to focus on product innovation and customer satisfaction since users can easily move to a competitor at any time. This internal focus on constant improvement keeps the product at the sharp end, and they have a very direct feedback loop with customers because they know that if they´re retaining them then they must be doing a good job. Compare this to MS Word which has barely evolved in years and survives only because of its ubiquity, all the while being threatened by the rapidly improving Googledocs.

So I was wondering how you could apply this to a cafe/restaurant. One of the ideas I’d previously been thinking about is a monthly subscription so that customers can eat a certain number of daily specials for lunch each month or have the same amount taken off other meals.

This would be convenient and good value for regulars. But it kind of locks people in, which of course is the goal of most loyalty schemes. Perhaps people would use the subscription because it’s good value for price but it wouldn’t force quality and innovation to continually improve and it could make the place lazy and boring, at risk of disruption by a new competitor.

So I thought, how about allowing customers to use their credit at ANY cafe in the city for exactly the same value (the most basic way to do this would be to refund receipts from other cafes although that´s a bit clunky – I’m sure there would be a smoother way.)

Allowing your hard-won subscription revenue to go to competitors flies in the face of conventional logic, but I love the feedback loop it would create: Every month I could measure the percentage of the subscription that was being used in MY cafe to see if we’re doing a good job. We’d never take a subscriber’s business for granted and only make money by ensuring we were the place they come back to the most often, voluntarily. It would send a strong and different message to customers that we don’t just appreciate that they have a choice about coming to us, we actually give them MORE choice by promoting disloyalty.

What do you think?

15 thoughts on “Marketing idea: The Disloyalty Card

  1. Kind of reverse psychology…I like it. It definitely goes against the grain, which is what you’re trying to achieve on all fronts: it will be a talking point and generate interest and dialogue, viral marketing in its purest form. If I understood correctly, you’d refund competitor receipts against the bill when a customer returns? You might have to cap it and say eg. a third of the total meal cost to make sure it targets the right people and not free riders 🙂 Maybe attach a comment card to the bill, so they can tell you exactly why they came back to cash it in.

    • Think maybe I didn’t explain it very well! It shouldn’t attract any free-riders because they’re only getting a refund for credit that they’ve already paid for. They wouldn’t actually gain anything. Unless you allowed people to claim back more than they’d actually paid, which would obviously be a bad idea!

      • Or maybe I didn’t read it very well…it’s been a long day! So basically they buy credit, spend some at your cafe and then you refund to them and deduct the $ they spend at competitors off their loyalty card? So both parties are as equally well off as they were before in monetary terms, except you gain the valuable feedback of why they returned and they gain the feeling of having freedom of choice. Still a talking point…

  2. Hi Tom
    Don’t know if you’ve seen Punchcard – but I’m writing about them at the moment and resonated (in terms of the tech they’re using -not the business model) with what you’ve written here.
    http://pymnts.com/news/businesswire-feed/2012/may/02/punchcard-goes-national–rewarding-customers-with-cash-back-at-their-favorite-merchants-retailers-and-restaurants-across-the-us-20120502005533
    I think what you have outlined is a really interesting idea. It recognises the fact that people want choice – we need diversity – but rewards the feedback cycle and builds community. Perhaps your restaurant needs its own currency – which is all that loyalty points are really – with a number of ways of earning that currency. You’d end up rewarding your customers in your own currency rather than hard cash. So you earn 2 of “Tom’s Dollars” if you eat at a competitor restaurant. You take a pic of the receipt and when you submit it to Tom’s Diner along with your feedback about how it compared with your usual TD’s experience, your account is credited with 2 Dollars.
    It would encourage loyalty also because realistically (at least in the first instance) you’d be the only retailer that accepted your currency. But you could keep it open by promising people that they are free to leave your community currency at any time they want and you’ll give them hard cash when they close their account (in turn for a little exit interview of course!)
    Sounds (possibly) horribly complicated written down but there are a bunch of mobile apps out there at the moment that do all the component parts of this.
    Look forward to talking about it more when/if you visit Sydney in your travels!

    • Very interesting, thanks Victoria. Would be perfect if it could use some pre-existing app. We will have to discuss over a cold beer when I get to Sydney! 🙂

  3. Hi Tom,

    Really enjoying the blog, and this post in particular has had me thinking since reading it.

    Here is a partially formed idea, ready for comment!
    Two effects a restaurant (or any business) want to create are:
    1 – repeat purchase
    2 – positive recommendations / community

    Which is what a loyalty (or dis-loyalty) scheme aims to achieve.

    So, what if we could achieve these effects another way?

    Assumptions:
    1 – Everyone loves a surprise
    2 – Everyone loves free stuff
    3 – Staff in your business pay attention to regulars / or there is some mechanism to identify regular customers
    4 – The scheme needs to be simple to administer and no more costly to implement than a traditional loyalty card

    Most loyalty cards offer a variation of buy 10 of XYZ and get the next one free, so you know exactly what you’re getting, and when you’re getting it. Or in your example, pay this and get that (at any outlet).

    How about a little surprise and delight to get my loyalty?
    As a regular customer I’m eating my lunch / dinner with friends and the waiter, who knows this is the 5th time this month or 4th time this week says, “the deserts are on the house tonight”.

    Surprised and delighted? – Yes
    Tell my friends? – Yes
    More loyal? – Yes

    I’ll be the first to admit the mechanics need work, but in principle if staff can identify a regular customer, and on every 6th – 10th visit surprise them with a complimentary coffee / cake / main etc you achieve loyalty with the added emotions of surprise and delight.

    Part of my thinking links back to your post on staff involvement, so they can share in the positive outcome of giving / creating reciprocity, and in the identification of regulars.

    Perhaps the mechanic can leverage twitter or foursquare so staff can see who the regulars are?

    This idea is far from fully formed so may be harder to implement in reality!

    • Love the idea and in fact have something very similar in the biz plan, exactly as you say – to reward and build on true loyalty (which customers have given of their own free will because they love what you do) rather than incentivise loyalty which might have them coming back only to get the expected rewards which is a far thinner form of loyalty and probably only works until someone else offers a slightly better promotion. Think you’d have to have a decent CRM system hooked up to the POS tech plus I think a big dose of employee discretion to reward customers when they feel it’s appropriate.

  4. I love the ethos that this would create. The reality for a restaurant is that each time one of their regulars eats elsewhere they are in effect losing ‘subscription’ money but without even noticing, this would make it totally explicit. Anything that gets customers to feel like a valued part of the company, and helps workers to treat them that way can only be a good thing. My only concern is about the perceived complexity both from the point of view of selling it to the consumer and setting up the mechanics of refunding other businesses. Both of which must be possible.

    • Hey Gwilym thanks for the comment. Yep, the ‘Disloyalty Card’ name is already out there, but I couldn’t see it being used in the way I described. Admittedly I only looked at the first page of Google results so may well have missed something. Have you seen the same idea implemented successfully somewhere else then?

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