In the blue corner, weighing not that much anymore, we have Loyalty programs. In the red corner, weighing a lot and growing rapidly, we have Affiliates programs. Now, it’s up to you to decide which opponent to side with. Are you ready to rumble?

Loyalty Programs:

Loyalty programs are the backbone of some major business’s relationships with their customers. Yet, these major companies aren’t receiving much praise or loyalty from them. But, why is that?

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Loyalty programs have been useful for a number of years, as businesses can reward their customers for continuing to purchase from their brand. Basically, everyone wants something for free, so when the business that you regularly trade with offers to give you free stuff, who would say no?

Loyalty programs also give a point of differentiation, as there is an extra benefit when making a purchase decision between a product that doesn’t offer you rewards, and one that does.

As well as this, loyalty programs collect data that provide insights into the purchase behaviours of their customers, which helps businesses understand their customers. For example, Woolworths’ loyalty program “Everyday Rewards” offers you member discounts, fuel savings, Qantas points and catered offers. By shopping with Woolworths, they gain data about your which brands and products that you tend to buy more of, which petrol and stations that you use, and plane trips that you take, all via their loyalty program — and all to market more specifically to you.

Against

So, loyalty programs have been useful for a number of years but are becoming outdated. Lance Walker in his TEDx speech said that “you can’t incentivize true loyalty”, and through his example of the local donut shop, he corroborated that point. There isn’t really a loyalty to loyalty programs anymore — but rather, a repeat purchase behaviour.

Lance Walker continues to prove through a show of hands that loyalty programs aren’t a major consideration in where customers shop — they don’t make you more loyal to a brand.

Loyalty programs do give a point of differentiation between brands and products, but over time, “points” in a loyalty program become worthless. As Jared Blank writes in his article, “loyalty programs don’t reward loyalty anymore, they issue a currency, and like all currencies, they can be devalued over time”. Differentiation is worthless now that reward values have declined.

There is no recognition for the customer, and that’s what you think that a loyalty program would focus on. They should be making you feel comfortable and important to their brand like you’re the only customer left in the world, but in reality, there’s a coffee card for everyone to grab.

The data collection of loyalty programs is a useful tool used uselessly. “Customers do not appreciate a poor value exchange”, as Lance Walker mentions. Customers are giving businesses their information, but they’re using it really poorly — they’re receiving offers that are irrelevant.

As Christopher Elliot wrote in his article, “loyalty programs as we know them are dead”.

Affiliates:

Affiliates programs are not exactly the new kids on the block; components of affiliate marketing have been around since the 90’s. The trend in the recent years has been towards affiliates programs, and away from loyalty programs. This is mostly because the affiliates programs focus on the link between the customer and the business, one thing that loyalty programs fail to do.

If you would like to know all about affiliates programs, take a look at one of our previous articles here.

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What affiliates programs do right is that they inextricably link the customer, business, and the advertiser. This gives a direct interaction that customers like to see — they like to know that they’re being acknowledged. Customers seem to want individual recognition for their purchases, and affiliate marketing concentrates on this.

For example, Crucial’s Partner Program rewards with a cash amount for each individual, successful referrals. The link between the business and advertiser is established as, once the advertiser signs up to the Partner Program, they’re armed with marketing material to advertise on their website or web page. The customer is then linked directly to the business via the advertiser, and when the customer purchases a product, the advertiser receives the cash reward.

Possibly the main way to be rewarded through affiliates programs is by the oldest, and most effective, form of communication — word of mouth. Simply letting someone else know that you’re passionate about great products or services that a business offers is the easiest way you can be rewarded by that business, as sort of a little “thank you” — for real loyalty.

Another positive about affiliates programs is that there is a real-time experience faced when participating. This means that you receive the reward the instant that you earn it; you don’t receive virtual points that can eventually accumulate into a reward of some sort — basically, you receive dollars instead of cents.

Using Crucial’s Partner Program as an example, it is possible to show you that affiliates programs are superior. Our Partner Program was introduced in 2014 as Australia’s best value hosting affiliates program, and instantly showed this by having 25 commissions earned per affiliate in its first month. Later, there was a 300% increase in the amount of commissions earned in the first quarter of 2015.

Against

There are a number of articles online that talk about affiliate marketing being dead, or a scam. But many of these are towards the bottom of Google first page, surpassed by the articles that rebut and reiterate that affiliates programs aren’t dead and won’t be for a long time — rather, they’ve just changed due to Google and Search Engine Optimization (SEO).

Results:

It’s clear to see that affiliates programs are fast becoming the heir to the throne, as loyalty programs are falling apart. This ever-increasing trend is a good thing to hear for both current and future businesses, as they will know how to satisfy and reward their customers, as well as attract new ones. At the end of the match, it’s safe to say that affiliates programs are the way to go.