Monday, February 28, 2011

Borders and the Long Good-Bye.

By now, you may have heard about the big financial mess that the US-based Borders book store chain is in. They recently filed for Chapter 11 bankruptcy and it’s hard not to see the whole situation winding up in a very bad place--sooner rather than later.

The Borders predicament is emblematic of a continuing shift in the way we purchase goods and services in the digital age. The canary in the coal mine were the travel agents, who saw themselves squeezed out of existence once consumers figured out they could just as easily make travel plans on their own.

The next domino was the music business, and with the advent of Amazon and e- books, now the book industry. Even though Borders has a nifty Web site, they unfortunately entered the digital game very late—and as the demand for physical books shrinks, you sure as heck won’t be making a trip to the mall to buy an e-book.

It appears that Borders will go down fighting. As a member of the Borders Rewards program, I received an e-mail from Mike Edwards, the President and CEO of Borders, Inc. It was well-crafted and heartfelt, and included the following passages:

As Borders moves forward, our commitment to you is to be a best-in-class bookseller—whether it’s our stores or—where you can purchase books and related products that stimulate and satisfy your reading interests.

Over the next several months, we will build on our core strengths as a great bookseller with the goal of emerging as the destination of choice for the millions of customers who shop our stores each year.

Sorry, but I’m not buying it. And the fact I’m not buying it leaves me feeling a little sad, as I think Borders was a good chain with some cool stores that I at one time visited frequently. I’m also left wondering which vertical will be impacted next.

This post is by Tom Rapsas and originally appeared on Loyalty Truth. Tom is a writer, creative director and strategist. He can be reached via Twitter @tomrapsas or at

Friday, February 4, 2011

The Death of Loyalty Rewards As We Know Them?

I’m sensing a tipping point in how customers relate to loyalty program rewards, and my thinking goes like this: when customers choose which company to do business with, rewards just don’t matter like they used to.

My take is that the classic loyalty reward scheme—earning points toward “hard” rewards for repeatedly doing business with a company—has been trumped by the customer experience. In other words, today’s customer is more likely to opt for a better experience today, than accept a lesser experience that pays dividends down the road.

Lets start with a personal example. I recently cleaned out my wallet of old business and program membership cards. There, I found reward cards for both Borders and Barnes & Noble. Now, I know I have points in both of these programs, but I haven’t engaged with either brand for years. Why? I’ve given all my business to Amazon, which for me offers a better customer experience.

A recent blog by marketing guru Seth Godin points anecdotally to a similar trend toward “experience over rewards” happening in the airline industry. Godin believes that the greater the risk involved with getting a reward—one we have to save for and may never use—the less we value it. He writes:

Frequent flyer miles, for example, began with the promise that if you flew an airline regularly for months (or even years) you'd get a free flight. The airlines oversold the miles and undelivered on the free flights, though, so the reward started to lose its perceived value—too much risk that you wouldn't get the prize you wanted. Many of the frequent flyers I know have ceased to 'save up' and now use their miles for upgrades, moving the benefit closer in time.

Godin’s point is backed up by a recent article in the Miami Herald titled: Are loyalty programs worth it? Travel writer Christopher Elliott cites several real-life examples of customers leaving airline programs, because the rewards are just too hard to earn. He points to a recent stat that seat requests for USAir reward flights had an availability rate of 10% and muses, no wonder “there are several trillion unredeemed miles floating around out there”.

In another sign of the sea change, several companies are now offering customers “loyalty rewards” with no points, or long-term loyalty, needed. Take the telecomm space, where both Verizon and Optimum have recently launched reward programs with merchant discounts, special promotions and exclusive content—with no strings attached. Prove you’re a customer and you’re in.

Why is the trend moving toward more automatic and instantaneous recognition of customers? Godin attributes the change to the Internet, stating “one of the many things the web is changing is our focus on now”. I see his point. Now more than ever, today’s consumer wants things at the speed of the Internet, whether it’s information, customer service—or a perk for being a customer.

Is this the beginning of the end of long-term loyalty rewards? The floor is open. What do you think?

This post, by Tom Rapsas, originally appeared on Loyalty Truth on January 26, 2011, and was also picked up by RetailWire on January 31, 2011.