Mar 5, 2008 6:03 AM, PROMO P&I, By Richard Tedesco

Rewards programs may draw some return business, but developing truly loyal customers requires more than special offers.

That’s the basic premise of a recent white paper from customer loyalty consultant Allegiance.

“Rewards programs definitely drive repeat business,” said Kyle LaMalfa, manager of best practices consultant for Allegiance. “But the rewards programs may not really be able to distinguish between the engaged customer and the discount shoppers.”

Rewards programs are part of a bigger marketing puzzle and have become a business themselves, LaMalfa wrote in the white paper, “Buying Loyalty: Do Rewards Programs Translate Into Customer Engagement?”

“While everyone likes to collect points, the emotional connection with consumers has more to do with brand qualities and promise,” LaMalfa wrote.

LaMalfa said companies need to pursue strategies that infiltrate consumers’ sensibilities: Strategies that cause consumers less anxiety about the future, and drive them to a company’s product or service as something saves them time and money.

“If your rewards programs are successful at adding value to the customer experience, as well as profits to the company’s bottom line, then rewards programs should be embraced,” LaMalfa wrote.

In the case of negative experiences associated with rewards programs, LaMalfa noted that engaged consumers don’t want to be assuaged with extra points. Instead they want to feel that the company is going to do whatever is necessary to ensure the problem doesn’t recur.

To reach the hearts and minds of customers, LaMalfa concluded that companies need to encourage two-way interaction with customers, to enable a means for them to express their opinions.

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