By Wayne Chargualaf

Loyalty programs remain one of the most visible aspects of marketing plans for businesses throughout the island. Every business is looking to give customers that little extra incentive to keep coming back. But with so many loyalty programs, is the market getting crowded?

“More and more companies are getting into it, but I think it’s more of a ‘me too’ thing, where people think if their competitor has a loyalty program then they need to have one,” Michael A. Hernandez, vice president of marketing and store operations for 76 Circle K, says.

“No one yet understands how best to use them right now, but I think a lot of businesses say, ‘Oh I need a Facebook account, I need to get on Instagram,’ but they don’t really know the mechanics behind what those social media accounts can do, and I think it’s the same thing for a lot of loyalty program,” he says.

The 76 Circle K stores have a long-running RFID key fob-based loyalty program called Power Pass that started in 2003. Hernandez says that since Power Pass is technology-based, it gave 76 Circle K a head-start on the use of data to analyze customer behavior.

“There’s a true science behind consumer behavior,” he says. “I’m not attesting we completely understand consumer behavior, [but] I think we have a good finger on what our consumer wants.”

What the customer wants from a specific business depends on the type of business it is. Gasoline is a commodity, so gas companies tend to focus on long-term reward structures based on the idea of the customer making multiple trips to the gas station over a long period of time. Although many people make a habit of getting coffee, it isn’t the necessity that gasoline is, so coffee shops tend to focus on more short-term rewards — structures in which customers get a free cup of coffee after spending $20, for instance.

Airline miles are a popular form of rewards that are tied into multiple loyalty program vehicles, such as gas stations and credit cards.

 “Airlines tend to be a more complex business than visiting a restaurant or filling up your car with gas,” according to United corporate communications. “[United] made various improvements to the MileagePlus program to make it valuable for members who travel once a year and our premier members who travel often. [United] wants it to be a program that makes customers excited and want to fly with United. Throughout the entire customer experience, [it] looks for ways to make traveling more seamless no matter how often a customer travels with [United].”

United’s Mileage Plus loyalty program announced in August that effective immediately all Mileage Plus miles will never expire, and rolled out new features such as discounted memberships with CLEAR — a company that uses biometrics to create a secure and more convenient traveling experience — and an enhanced app. Mileage Plus named best overall airline loyalty program for 2019 by Global Traveler magazine — its 16th year earning the honor

Tourism — Guam’s biggest business sector — uses loyalty programs as well. Ken’s PHR Club, however, has a unique twist.

“PHR Club is only available to locals,” Shigenori Miyoshi, PHR Ken Club manager, says. PHR Ken Micronesia Inc. — which does business as Ken Corp. — already gets a steady stream of business from its various hotels such as the Hyatt Regency Guam, Hilton Guam Resort & Spa, and the Country Club of the Pacific. PHR Club is meant to open up Ken Corp.’s market to appeal to local customers. Even if the tourism market encounters disruptions, the local market will always be here.

“A lot of local people are wary about eating at a restaurant in a hotel because of the cost, but with a membership, they can get a 20% discount,” Miyoshi says.

PHR Ken Club customers also get spa rewards, golf rewards and complimentary room stays.

“It really encourages local members to come in and dine,” he says.

Regardless of the type of business, loyalty program structure or sophisticated data analysis, loyalty programs are ultimately a means of enticing satisfied customers back to your business — which means that they need to be satisfied first. No loyalty program can make up for an inferior product or service.

“Ultimately, I think the true loyalty factor lays in how you treat your customers,” Hernandez says. “Boots on the ground customer service is what really wins loyal customers.”