CRM and Loyalty Can’t Fix a Broken Business, think CAKE!

Anyone who knows me knows that I love cake (gluten free these days, but still cake.) My grandparents, uncles and now cousins have all been involved in building a successful chain of bakeries on the Gold Coast. Oddly enough, I think bakeries provide one of the best ways to explain where CRM and loyalty sit in customer strategy. Running a bakery is a perfect analogy for how customer engagement really works.

The Cake — The Core of Your Business

The cake itself is the core product. In business terms, this is your brand, product quality, pricing and value proposition. If the cake tastes terrible, nothing else really matters. You can have the best loyalty program in the world. You can have sophisticated CRM journeys. You can send perfectly timed and personalised communications. If the cake tastes bad, or worse, has not been created to suit the tastes of your customers; they might try it once, but I doubt they’ll be back for that second slice (which we all want them to do). This is something I see often. Businesses rush to implement loyalty programs or sophisticated CRM programs hoping they will fix declining engagement, sales or retention. CRM and loyalty cannot truly solve core business problems. When leadership at JCPenney removed coupons and moved to “everyday low pricing” in 2012, the strategy was logical on paper: simplify pricing, reduce discount dependency and modernise. The problem wasn’t pricing mechanics. The problem was misunderstanding the customer, effectively changing the recipe without understanding what customers actually valued. Their customer didn’t just want lower prices. They wanted the feeling of getting a deal. The cake had been fundamentally changed without recognising what customers valued and no CRM journey or loyalty program could compensate for that disconnect.

The Icing — The Key Differentiator

Now let’s talk about the icing. This is where loyalty programs often sit. The icing adds sweet delight. It adds differentiation. It elevates the total experience. Customers might choose your bakery because the cakes are great, but the icing enhances the flavour and makes them feel good about coming back to your bakery instead of the one down the road. You might have many similar types of cakes, but depending on your customer base, certain flavours of icing might be appealing to some customers but not to others. This is where loyalty programs can shine: different offer and recognition strategies based on your customer cohorts as well as delivering recognition, rewards, exclusivity and emotional connections. But again, the icing only works if the cake underneath it is good.

The Service — Saying Hi and helping Me Choose My Slice

The third piece isn’t actually delivery. Distribution and sales get the cake into the customer’s hands. In this analogy, the service is CRM. CRM isn’t the truck delivering the cake, it’s the conversation that helps me choose the right slice. The customer may have discovered your bakery through paid media or word of mouth. CRM is what happens next. It’s welcoming me when I walk in. It’s remembering that I always choose the flourless chocolate cake. It’s letting me know my favourite flavour is back in stock. It’s suggesting something new I might like based on what I’ve bought before. It’s showing me which icing complements my usual choice or why I should purchase based on the icing. CRM ensures I’m aware of what’s relevant to me, at the right time and in the right way. If the cake is great, the icing is average and the CRM is poor, you will still attract customers. But you won’t maximise the opportunity. That gap represents lost potential; missed visits, lower engagement per visit, slower second purchase and reduced customer lifetime value. This is where CRM and loyalty add real commercial impact, not by fixing a broken product, but by helping customers extract more value from a good one.

Where Businesses Get It Wrong

Many organisations treat CRM and loyalty as solutions to growth problems. “I think my cake is perfect, let’s just add better icing and some friendly servers.” They’re not solutions in isolation. They are amplifiers. If the core product is strong, CRM and loyalty can dramatically increase engagement, repeat behaviour and lifetime value. If the core product is weak, CRM and loyalty simply make the weaknesses more visible.

The Real Formula

The best businesses get three things right:

1. The Cake — a strong product and value proposition, built around the tastes and needs of the customer they wish to target

2. The Icing — loyalty benefits that create emotional connection and differentiation

3. The Service — CRM that guides, informs and personalises the experience at the right moment

Each element works independently, but the real power happens when they work together. When the cake is great, the icing is delightful and CRM is exceptional… Customers don’t just buy a slice, they come back for the whole cake time and time again. And that’s where real customer value is created.