Loyalty shouldn’t be something that comes with a price.
So where did the notion of a loyalty discount come from? Should companies should be rewarding customers for the simple act of continuing to be a customer?
I see it quite often in feedback emails. Things like, “I’ve been a customer for five years. I would expect you would give me a discount for my loyalty.”
Often customers who want this loyalty discount are also upset because we offer a (small) discount to new customers that isn’t available to existing customers.1 They wonder why we would reward a new customer with a discount when we won’t also reward an existing customer with the same discount2.
Perhaps it’s a misunderstanding about why we offer new customers a discount in the first place.
A first-purchase discount is not a reward provided to new customers in exchange for them choosing us. It’s a monetary incentive we provide in an attempt to convince them to try us over our competitors.
True Loyalty vs. Paid Loyalty
Our truly loyal customers are loyal to us because we continue to offer a high quality product at a fair price. They see the value in what we offer and continue to stay loyal despite the efforts of our competitors who (just like us) offer a discount to them in an effort to entice them to switch.
When you think about it, we’re the ones who get the benefit of our customers’ loyalty, not the other way around. It’s the customer who is offering us the reward of their loyalty in exchange for us continuing to provide value for their money, along with a useful product or service.
Let’s be honest here—when customers expect a loyalty discount, what they really want is a retention discount and they almost always ask for it with a thinly veiled threat. Once you start paying for this false loyalty, you’ll have to keep paying more and more until that customer leaves for what they perceive as the greener pastures of your competitor.
Make a great product or service and sell it at a fair price and you’ll get the reward of your customers’ loyalty. Trying to buy that loyalty with discounts is a fool’s game.
Either a 10% discount via a podcast sponsorship promo code or a referral code discount of $2.↩
We do, of course, offer a discount to existing customers who reach certain volumes of business with us. The more money you spend, the more I’m willing to cut into my fairly tight margins to reward them for contributing more to the bottom line than the average customer.↩