Transparency is key when introducing something new, or changing up something customers already use. Dunkin’ angered its customers by promoting its new program as better than the old one. Instead, brand experts said marketers should be honest—many companies are going through cost increases and trying to navigate a difficult financial climate. Customers might be more understanding if a brand comes out and admits they are raising prices or making changes because of the tough economy.
“Consumers are savvy and 'spinning' a narrative that isn’t based in fact can cause a bigger problem than desired,” said Kimberly Whitler, a marketing expert and professor at the University of Virginia's Darden School of Business. Anything that erodes trust, like changing a beloved loyalty program, can damage the consumer-brand relationship, she noted.
“During a period of significant inflation, it should be expected that companies will start to reduce the value of their loyalty programs,” she added, noting that it is the communication on the change that matters. “Pretending to strengthen the rewards if in fact they have reduced the rewards is being dishonest and can lead to reduced consumer trust.”
Make sure there’s a customer need
The short-lived car subscription trend of a few years ago can provide valuable lessons to marketers. In 2017, many automotive brands, including Cadillac, made headlines for introducing their own subscription services, taking a page from category-disrupting companies such as Netflix. For a monthly fee—$1,500 in the case of Cadillac—members could switch vehicles whenever they’d like.
However, the trend was slow to catch on for a variety of reasons, according to Jessica Caldwell, executive director of insights at Edmunds.com, the car research site. One was simply that drivers were reluctant to go through the hassle of switching car seats and other personal items from vehicle to vehicle on a more regular basis than every few years, she said. The service simply didn’t make sense.
“It wasn’t necessarily fulfilling a need most people had,” she said. “Price, we know, is the most important factor, and you have to make sure when you are comparing the cost of a subscription versus the cost of ownership—are the benefits really worth it to the consumer to pay that much more?”