The call between Frank Alioto and his favorite cruise line went down like something straight out of a made-for-TV drama. You know that turning point where the hero actually turns out to be the villain? Just like that.
He and his wife, Susan, had accumulated 130,000 loyalty points over the years, using a special credit card called an “affinity” card that lets you earn more loyalty points, but can come with a series of unfavorable terms, like a higher annual percentage rate or a yearly fee.
“The program promises, among other rewards, that 125,000 points can be redeemed for a free five- to seven-day Caribbean cruise for two,” he says. And the Aliotos had collected for years, assuming that once they earned enough “loyalty” points, they’d get their promised cruise vacation.
But that didn’t happen. When they phoned the cruise line, they were told that as of Sept. 1, it had made some changes to their program. The itinerary they wanted wasn’t available at any price.
“I tried to explain to the representative that we had the points banked prior to Sept. 1, and never received any notice of any changes and would’ve booked prior to the Sept. 1 date if notified of any such change,” he says. “She then blamed the post office if I did not receive such a notice.”
Alioto is just the latest victim of recent and highly unpopular loyalty program reforms. Hardest hit are airline programs, which are adding new restrictions to their programs while also making them more confusing to the average passenger. But other industries, from supermarkets to cruise lines, are not far behind. Loyalty points seem to be the only investment that consistently decreases in value.
The question isn’t whether business can change the rules of the game at halftime. It isn’t even whether loyalty programs are fair to customers (the correct answer: not really).
The real question is: How do you prevent yourself from getting into this situation of being betrayed by a company in the first place?
Don’t give away your loyalty. Your money is valuable. Alioto spent years and tens of thousands of dollars trying to collect points that ultimately fell short of his goal. Who benefited? The credit card company and the cruise line, but not him. Before buying in to any loyalty program, make sure that you understand the true value of your loyalty and that you are getting adequately rewarded for it now, not at some point in the future.
Pre-screen the company. Looking back on a company’s track record gives you an excellent snapshot of its corporate DNA. A good place to start is the authoritative ACSI ratings, which assign a score of 1 to 100 based on a company’s customer-service performance. If a company’s done well historically, chances are it won’t betray you in the future — although that’s certainly no guarantee.
Look for signs of trouble. A change in leadership, a leveraged buyout, a bankruptcy filing — all of these should send up warning flares and should always trigger a review of your loyalty to a company. In my own experience, a bankruptcy is the leading cause of a downturn in customer service and loyalty to a company’s best clients, followed by a leveraged buyout and a leadership change.
Beware of “oh-by-the-way” notices. Companies that sneak changes into your loyalty programs or add surprise fees to their products may just be doing what’s necessary to turn a profit. And their actions may not harm you right away, which might leave you feeling safe. But the truth is, any company that tries to pull a fast one like this will eventually do something that will undermine your ability to collect the rewards that are due to you. Mark my words, you should break up with that company sooner rather than later.
Don’t be blinded by points and gimmicks. Remember: Nothing is free. You’re paying for the points you collect, either by surrendering your valuable spending data and other personal information, or by paying more for a product that is often less valuable. Your loyalty must be clear-headed and rational. If it makes sense to participate, then participate. If not, it’s time to find a new company to be loyal to, or to simply buy the best product at the right price. You know, the way people used to do it. Now there’s a novel idea!
I’m not sure if the Aliotos will get the cruise they want. They may have to settle for a lesser itinerary. Before they burn through their points, maybe they’ll take my advice to cut up their credit card and book their next cruise on a line that appreciates their business — not one that just says it does.