Customer loyalty experts say businesses have to offer more than points and rewards to maintain a genuine relationship with customers, according to Jason Compton of http://www.DestinationCRM.com/.

Between the explosion of miles-based programs and the expensive telecommunications customer-acquisition wars of the 1990s, loyalty programs providing incentives in exchange for business have been under the microscope for at least a decade. Compton spoke to two experts who warn that as the business environment improves, companies should proceed carefully in implementing new loyalty programs or altering their current schemes.

“If you look at loyalty as a program you’ll get bid down, always looking at how you can sweeten the pie,” Don White, executive vice president of marketing services firm Quaero told Compton. “I think many companies are beginning to recognize this and understand that the investment they have to make is not just in rewards programs, but in creating a better customer experience.”

Harvey Thompson, author of “Who Stole My Customer?,” expanded: “Frequent flyer miles or points are easy to copy and isn’t true loyalty, but just another form of price-based competition, and [customers] will leave as soon as they find another card with more points or an easier way to get those airplane tickets,” Thompson said.

Thompson said that the key to effectively competing for loyalty is ensuring the quality of the customer experience, not the quantity of customer rewards. “In the last five years there has been a surge of emphasis on service … in every customer touch point, trying to provide value to customers that differentiates.” It is “extraordinary service” experiences that capture and hold customer attention and loyalty, and raise the bar for competitors.

White concurs. “You can’t make customers more loyal by giving them more points or rewards to do business if the other parts of the interaction are broken,” he says. “I think more companies are realizing now [that they need to] use technology to improve the customer experience and add value beyond bribing customers to continue to do business.”