What Do Online Points Add up To?

As consumers in the offline world, we have developed the expectation that spending money should earn us points. I always think about it when I’m checking in for a flight, renting a car, or booking a hotel room, and I often wonder if this obsession with points will ever take such a firm hold on the Internet.

Since the beginnings of the World Wide Web, several loyalty programs (Cybergold being the leading player) have created points systems. The most common way to earn points in the online world is you guessed it by spending money.

Then again, you can earn points for handing out your email address, reading your emails, surfing, recommending a product, placing ads in your email client, reading ads, and finding stuff. The plethora of points-earning opportunities in the real world has nothing on the multitudinous number of means available in cyberspace. After all, most points-earning solutions in the real world are based on the buy-stuff-get-points model. In some cases, there are buy/recommend-stuff-get-points possibilities. Lots of them, but not many variations on the theme.

So it would seem that offering points on the Internet must be successful. But is it?

There’s not much data available on the topic. Actually, there’s almost no information, which may be an indication that points on the Internet isn’t as hot a proposition as we thought it could be. And even if the strategy were hot, my question would be, Will it build your brand or will it just lock your customer into the points jail, otherwise known as a loyalty program?

People are controlled by points in the offline world. According to the findings of a 1998 AC Nielsen study, many people choose to fly up to 25 percent longer in time and distance just to preserve their loyalty to a certain airline company. But what sort of loyalty does the points compulsion build?

Whenever I feel compelled to do anything that, if it weren’t for the points, I wouldn’t do, I deny myself a freedom. Compulsion to earn points, though freely chosen, creates a perverse relationship between the customer and the brand: a love-hate relationship. For myself, I hate allowing my choice to be driven by the points strategy, yet I love the sense of earning something for nothing.

The question is, should hate be a part of branding? I don’t think so. In any case, once the points rebate stops, so does the customer’s interest in the brand. And in reality, the value for the customer is very little because the price the customer really pays for the points is restricted flexibility.

The catch-22 is that companies themselves are compelled into the points strategy because their competitors are into it. Once one started, everyone had to keep up, and now nobody can stop it.

So, how does throwing your brand onto the points bandwagon affect your branding?

First of all, not all products are suited to points programs, and not all brands can benefit from them. Just imagine the effect on Rolex, for example, if the brand were to establish a points system for buying watches. My guess is the exercise would downgrade the customer’s estimation of the product and therefore discount the perceived quality of the brand.

Secondly, it’s a mistake to confuse branding with establishing a points-based loyalty program. Prisoners don’t stay in jail because they love it, and points programs imprison consumers into predetermined choices.

Branding creates awareness that then depends on the individual’s freedom of choice. It might build some emotional ties between the customer and the product, but never financial ties. The use of loyalty systems works in the opposite direction by binding the customer financially rather than emotionally.

Strong brands, from my point of view, are brands that offer the customer freedom. When I’m forced to use a certain product, and the force is because of my own intellectually stimulated compulsion rather than any emotional attachment to the product, I believe branding has failed. This is not to say that points systems on the Internet will fail. But I think there is a reason why so few web sites have developed successful points systems: Consumers value their freedom.

And by the way, you’ve earned 105 points just by reading this article, which allows you to read my next article next week same time, same place.

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