old to stores for a small fee. The store distributed these stamps to customers as a eXcellence in Telecommunications The Telco Churn Handbook reward for buying from them. The more the customers spent, the more stamps they received. By getting people to become interested in collecting these stamps, the stores were able to elicit loyalty from their customers. But why would anyone want to collect these silly stamps? Well, after collecting the green stamps over a period of time and pasting them into book after book, the customer was eventually able to redeem these stamps for some very nice prizes. The S&H Company offered transistor radios, cooking utensils, even a new television, all for the correct number of books. The S&H green stamp is no longer the big agent of customer loyalty, but similar programs have been able to mimic its effectiveness. The modern program, though more sophisticated, works basically the same way. Customers are rewarded for buying more. Sometimes they get prizes; sometimes they get price discounts. While points and awards programs have their place in the market, there are several serious drawbacks. First, the programs, meant to encourage loyalty, have little effect if all of the competition institutes equivalent programs. For example, in the S&H green stamp case, the loyalty factor was neutralized because all of the stores in the neighborhood began offering the same stamps for the same products. Second, as consumers become more sophisticated, the loyalty objective of points and awards programs can quickly be reduced to a form of price haggling. In this instance, customers are not developing loyalty; they are displaying shrewdness in their negotiations with your company. Preferred Customer Status One of the most successful loyalty approaches in practice today is the customer preferred status approach. In this kind of program, customers are recognized for their value to the company and treated accordingly. By far the strongest and most easily recognized preferred status programs exist in the air