Most loyalty programs offer a tiered membership. United Airlines, for instance, offers Premier, Premier Executive, and 1K Elite membership (in addition to "plain" membership). Hotel chains are similar. Marriott Rewards offers Silver, Gold, and Platinum membership. Each membership level has certain entrance criteria. Airlines require you to fly a certain amount of miles (or legs) with them in a year to qualify for various membership levels. Hotels require a certain number of nights at their hotel during the year.

The problem is every year, these companies wipe the slate clean and ask me to prove my loyalty again, with no regard to my previous history. It makes a little sense from the company's viewpoint: provide incentive for people to transact with it a certain number of times a year to maintain their membership level.

It doesn't make sense from a customer's point of view, however. After being an Elite member of United for years, I've dropped to regular status this year. Why? Our recent clients are located in parts of the country not served directly by United, making flying with it stupid (unless doubling or tripling travel time is a priority). Is that my fault? No. I'm a loyal United customer, and whenever I have the choice to fly it I do. But I don't have a choice right now, as it doesn't offer direct flights to my destinations. That doesn't make me any less loyal.

Get the full story at ClickZ