Stop Demoting Customers!

Posted on 23. Apr, 2009 by in Customer Recognition

When economic times get tough, we all start to examine expenses and “tighten our belts”.  But our customers may be easing off in their spending as well.  That’s why I find it particularly ironic that many businesses turn to their customer loyalty programs for savings.  They appear to fool themselves into thinking that if they reduce the number of customers to whom they’re extending special privileges, they’ll save money.  My wife, Linda, and I recently experienced being demoted by Harrah’s casinos.  While we’ve been Diamond players for the last few years, in 2008 we didn’t frequent Atlantic City quite as much as in years past.  Consequently we didn’t meet the level of play traditionally established for Diamond membership.  When we recently received our 2009 loyalty cards we were “congratulated” for attaining Platinum membership (a lower level, with fewer privileges).  In other words rather than banking on the fact that we would return to our former playing level at some point in the future, Harrah’s demoted us.  Other casino companies, Boyd in particular weren’t so short-sighted.  Even though we cut back in similar proportion at Boyd’s Borgata property, they “grand-fathered” our previous Black level status throughout 2009, obviously hoping we’d return to our pre-2008 level of visits and play.  Guess what?  Boyd is getting all of our future play.  We won’t be returning to Harrah’s – at least not as regular players!  Harrah’s has fulfilled its own prophecy.  Their demoting us has encouraged us to concentrate our play at their competitor’s property.

Diamond-colored plastic (as far as I know) doesn’t cost anymore than Platinum-colored plastic.  And, the few additional freebies allocated the Diamond player aren’t going to break a casino.  Yet, Harrah’s has been so restrictive in awarding the higher player level that their rigid enforcement is actually chasing good customers away!  Good customers should be given the benefit of the doubt.  If they consistently fail to return to their level of higher spending then perhaps their perks should be reduced.  But, premature or overly aggressive enforcement of “mileage or spending hurdles” will only damage the relationship these once valuable customers have had with a business.

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2 Responses to “Stop Demoting Customers!”

  1. Jon Berry

    28. Apr, 2009

    Terry,

    I really like the point you make regarding the difference in actual cost to the casino vs. the perceived value, or rather lack of value that the customer is left feeling when being

  2. Doug Pruden

    05. May, 2009

    Some companies in the consumer services arena still lack the ability to fully track REVENUE generated per each customer. Even more businesses fail to measure PROFITABILITY at the individual customer level. Harrah’s seems to do a good job at both.

    But there’s a third component that’s key to managing for the growth of customer profitability – that’s POTENTIAL. Like most companies Harrah’s appears not yet to have a process that tells them which of their customers continues to spend (and could even spend more eith them) but simply has moved their loyalty elsewhere – and who needs further development rather than demotion.

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