In 1981, American Airlines introduced the first frequent flyer program to reward and recognize its best customers. The program exploded and attracted millions of participants, causing every airline to follow suit.
Today, frequent flyer incentive programs constitute an industry unto itself; people buy and sell miles, brag about their status level (“I’m now at platinum. That means I get to board the plane ahead of you!), and basically view accumulated miles as a form of currency and a standard of achievement.
The programs have also migrated to other service categories. Hotels, car rental companies and even credit card companies offer them.
The vast majority of miles never get redeemed. In fact, more than three trillion accumulated miles go unused each year. Yet, we probably know people who plan inefficient trips with several connections just to achieve a certain mileage status.
So why all the clamor if the miles really don’t get used? The psychology behind these programs is that they make consumers feel special and “on the inside,” even if all that means is that you get to board the plane five minutes earlier than your buddy.
Loyalty or VIP programs are designed to make purchasers feel like they’re members of a special club. They get the first shot at semi-exclusive travel or event opportunities. They’re the ones recognized as top-dogs when they go into the airline lounge. They’re the ones given the opportunity to enjoy a roomier seat at no extra charge. Not to mention the free baggage check!
Most of these perks cost the provider little or nothing, but they generate so much psychic income for them. You know that feeling when you’ve purchased your tenth coffee and they punch your card and offer you a freebie? Is it the coffee that’s important or that feeling of accomplishment?
The interesting thing about this “members only” approach is that it can be applied to virtually anything. Imagine an optical shop that sends a notification to its VIP customers that an exclusive, new eyewear line will soon be introduced and they’ll have first crack at it and enjoy a small discount. Or a buy-one-get-one promotion only for your loyalty members.
In an age where patient retention is becoming more and more daunting for independent ECPs, turning good customers (read patients) into VIPs makes a lot of sense. And once they’re your VIPs they also become your champions.