Going the Distance: Four Ways to Build a Better Customer Loyalty Program for Your Brand

It’s easy enough for a customer to join your loyalty program, especially when you’re offering an incentive such as discounts. All your customer has to do is give out some basic information, and voila! They’re in the fold, a brand new loyalty member with your company. From there, it’s happily ever after. You offer the perks; they stand solidly by you, bringing you their continued business. Simple. Or is it? In reality, just how many of those customers are act ively participating in your loyalty program? Do you know? Sure, loyalty program memberships are on the rise according to market research company eMarketer, having jumped 25 percent in the space of just two years. However, that figure may be a bit misleading. The truth is that, while loyalty program sign-ups may be more numerous, active participation in such programs is actually in decline. At the time of the study, the average US household had memberships in 29 loyalty programs; yet consumers were only active in 12 of those. That’s just 41 percent. And even that meager figure represents a drop of 2 percentage points per year over each of the preceding four years, according to a study by loyalty-marketing research company COLLOQUY.

When discounts just aren’t enough

So what’s a brand to do? How can you make your loyalty program worth your customer’s while—as well as your own? After all, gaining a new loyalty member doesn’t mean much if your customer isn’t actively participating in your program. Consider this: Does your customer loyalty program offer members anything different from what your competitors are offering? Chances are your program includes discounts. That’s a given. And what customer doesn’t appreciate a good discount? But when every other company out there is providing this staple benefit in comparable amounts, it becomes less and less likely that customers will remain loyal to any one particular brand. Frankly, it’s all too easy for customers to get lost in a sea of loyalty member discounts. They’re everywhere. In fact, just under half of internet users perceive that all rewards programs are alike, according to a 2015 eMarketer survey. The key to success, then, is to differentiate your business from the crowd. If you can offer your customers something unique and valuable beyond the usual discount, chances are they’ll be more likely to stick with your brand. Here’s some inspiration from companies who get it.

Virgin: Reward more purchases with more benefits.

That’s not to say you need to get rid of discounts entirely. In fact, nothing could be further from the truth. Customers still love a good discount. The goal is to be creative in terms of the loyalty perks you offer. Take the Virgin Atlantic Flying Club, for example. As part of its loyalty program, the airline allows members to earn miles and tier points. Members are inducted at the Club Red tier, from which they can move up to Club Silver and then Club Gold. Here, it’s not just a discount. It’s status. And people respond to feeling important, elite. Still, even where the rewards themselves are concerned, Virgin is motivating loyalty customers with some pretty attractive offers. At the Club Red tier, members earn flight miles and receive discounts on rental cars, airport parking, hotels and holiday flights. But as members rise in tiers, they get even more. At the Club Silver tier, members earn 50 percent more points on flights, access to expedited check-in, and priority standby seating. And once they reach the top, Club Gold members receive double miles, priority boarding and access to exclusive clubhouses where they can get a drink or a massage before their flight. Now that’s some serious incentive to keep coming back for more. Discounts are still part of the equation – but they are designed with innovation and personal value in mind, elevating them to more than just savings.

Amazon Prime: Pay upfront and become a VIP.

What if your customers only had to pay a one-time upfront fee to get a year’s worth of substantial benefits? It may not sound like the smartest business idea at first glance. But take a closer look. Amazon Prime users pay a nominal $99 a year to gain free, two-day shipping on millions of products with no minimum purchase. And that’s just one benefit of going Prime. It’s true that Amazon loses $1-2 billion a year on Prime. This comes as no surprise given the incredible value the program offers. But get this: Amazon makes up for its losses in markedly higher transaction frequency. Specifically, Prime members spend an average of $1,500 a year on Amazon.com, compared with $625 spent by non-Prime users, a ccording to a 2015 report from Consumer Intelligence Research Partners.

Patagonia: Cater to customer values.

Sometimes, the draw for consumers isn’t saving money or getting a great deal. The eco-friendly outdoor clothing company Patagonia figured this out back in 2011, when it partnered with eBay to launch its Common Threads Initiative: a program that allows customers to resell their used Patagonia clothing via the company’s website. Why is this program important to customers? And how does it benefit Patagonia? The company’s brand embraces environmental and social responsibility, so it was only fitting that they create a platform for essentially recycling old clothing rather than merely throwing it away. The Common Threads Initiative helps Patagonia build a memorable brand and fierce loyalty by offering its customers a cause that aligns with deep personal values. OK, so their customers get to make a little money, too. Everybody wins.

American Airlines: Gamify your loyalty program.

If you’re going to offer your customers a loyalty program, why not make it f un? After all, engagement is key to building a strong relationship with your customer. And what better way to achieve that goal than making a game of it. American Airlines had this very thing in mind when it created its AAdvantage Passport Challenge following its merger with USAirways. The goal: find a new way to engage customers as big changes were underway. Using a custom Facebook application, American Airlines created a virtual passport to increase brand awareness while offering members a chance to earn bonus points. Customers earned these rewards through a variety of game-like activities, from answering trivia questions to tracking travel through a personalized dashboard. In the end, participants earned more than 70 percent more stamps than expected – and the airline saw a ROI of more than 500 percent. The takeaway: people like games.

Stand out from the crowd.

Your approach to your customer loyalty program should align with your overall marketing approach. Effective branding is about standing out, not blending it. Being memorable is key. To this end, keep in mind that loyalty programs are no longer a novelty. That means that yesterday’s strategies won’t work moving forward, so look for ways to rise above the noise, setting yourself apart from the cloying drone of countless other cookie-cutter programs.

One Year Later

Today, there is freedom in marketing. No longer is the loudspeaker of the media controlled by a select few. As a result, so much more can be gained than ever before, all with fewer resources and less risk. The playing field has been officially leveled—and not a minute too soon.

With those words, we launched the first Fame Foundry Magazine and began leading a revolution.

Recognizing that the world of marketing is riddled with misinformation and con artists, we set out on a mission to cut through the static and get to the truth of the challenges of growing business today.

Each month we bring you articles that cut through the muck of jargon, myths, speculation and the outmoded ways of old marketing to give you the clarity and perspective you need to thrive in today's marketplace. As we mark our first anniversary, we take a look back at the fundamentals of new marketing that we’ve established over the past year.

The end of marketing as we knew it

Prior to the advent of the Digital Age, our culture was based on a handful of media. Television, print and radio were the anchors of mass information exchange and business promotion.

As a result, if you owned a business or were charged with growing a company, you were shackled to promotional entities such as television commercials, newspapers and the Yellow Pages.

Those days are long gone, and those systems are now dying. In their place are unlimited channels of conversation not only between one person and another but between people and business.

No longer does mass media claim a chokehold on the lines of communication between companies and customers. No longer are information gathering and sharing the exclusive domain of mainstream news organizations. No longer are consumers willing to passively absorb the web of lies concocted by marketing’s spin doctors.

Today the means of communication have been revolutionized, and the old methods marketing to the masses have been rendered ineffectual.

Read more:
Prying the Torch From the Dead Hands of Old Marketing

All hail the virtual agency

The only thing deader than old marketing is the traditional agency, and its business model is in the grave right along with it.

Today's marketplace is ruled by survival of the fittest. It's time to get faster, leaner, smarter and more agile, and marketing agencies are no exception to this rule.

The new marketing company is one that hasn’t forsaken business principles that are timeless but takes advantage of all that’s afforded by today's technology to shave off unnecessary expenses.

OUT: Deals with a select few in a position of control.

IN: True, choice-based media, entertainment and communications.

OUT: Expensive payments to big, traditional, bureaucratic agencies that still attempt to use carpet-bombing tactics to grow your business.

IN: Fresh and nimble development firms who know how to build a brand and grow a following around it using today’s communication systems.

OUT: Paying the price for enormous overhead expenses for big buildings and lavish offices filled with excessive personnel.

IN: Virtual and hybrid marketing firms that work fast and don’t pass the bloat of unneeded expenses on to their clients.

OUT: Working through layers of costly production managers, account executives and supervisors before you get to the people that really do the work.

IN: Having access to the key architects and creative talents who are integral to the ideas and concepts essential to your success.

Read more:
10 Things You Pay for From Traditional Marketing Agencies

If marketing is dead, what's next?

Getting and keeping customers is what it's all about. That much hasn't changed. What has changed is what's needed to achieve it.

Gone are the days of growing your brand by marketing to the masses. Today’s consumers are disengaged from commercial culture as we once knew it, disenchanted with marketing’s shallow messages and misleading claims and disillusioned by promises unfulfilled. Instead, they are ever in search of the authentic. They are driven to seek out companies they can believe in and to identify themselves with brands that inspire them.

In a world of unlimited channels of communication, loyalty is no longer a commodity that can be bought rather than earned. In the new millennium, trust has become the currency of a marketplace driven by the consumer, and the new way to grow business is through trustcasting.

Simply put, trustcasting is the ongoing process of building and maintaining trust between a business and its customers. The practice of trustcasting requires that any and all resources dedicated to the promotion of business be directly or indirectly founded in trust.

Trustcasting approaches customers as people, not numbers. For those ingrained in the old practices of mass marketing, this represents a daunting ideological shift, but the task of earning and keeping trust cannot be reduced to statistics or demographic segments.

Recognizing word-of-mouth as the primary medium by which today’s customers are won, those that practice trustcasting engage in two-way communication with their customers on a human level, demonstrating genuine respect and value for their time and attention. While this approach undoubtedly requires a more significant investment in time and resources than traditional marketing, the return — cultivating a community of evangelists around a brand – is also much more profound and lasting.

Read more:
Put Away the Smoke and Mirrors
The Trust Manifesto
Goodbye, Marketing. Hello, Trustcasting.
10 Resolutions for Success in 2010 and Beyond
10 Keys to a Successful Marketing Partnership

A brave new world

In today’s marketplace, the Web is where customers are won and businesses grow.

It starts with a great website – one that has successfully confronted and conquered the challenges of providing a beautiful interface, engaging content and utility beyond your primary offering. However, even the best site is only the first step; it’s the foundation upon which you can start to develop a community around your brand.

Once you’ve launched your site, you’ve effectively set up shop and opened the doors. That’s when the real work begins.

To get and keep customers, you must master the Web marketing universe beyond your own site. You must actively seek out those whose needs, desires and interests align with the products or services you offer, draw them in and engage them in conversation.

While it may initially feel like daunting and unfamiliar territory, the key to navigating this new landscape successfully is to ensure that all of your efforts are driven by the motivation of establishing and keeping trust. As long as you always follow the principles of trustcasting, you will inevitably turn contacts into customers, customers into fans and fans into evangelists, all while cultivating a vibrant virtual community.

Read more:
The Web Marketing Universe
On the Right Path
Best of Charlotte Website Design
The “No Duhs” of Social Media
10 Principles of Trustcasting in the Web Marketing Universe

Be yourself or be nothing at all

It’s a mantra worth repeating: People follow people, not companies.

PR done right in today’s marketplace is about people. Cultivating a fan base and creating rich relationships with your public requires that you drop the corporate mask and be a real person.

The public has no affection for the face of corporate America. No one wants to see standard form-letter responses and press releases on Facebook, Twitter and the like.

You must stop being corporate and start representing your brand on a personal level. Be real, flaws and all. Be prepared to be honest through and through. Share your time, your action and your help. Be present every day – accessible and responsive – without fail.

If you try to play it safe and fabricate a personality that shows the world the face you want the public to see, this artifice will be found out quickly. No one will invite you back to the conversation. In fact, you will be banned from the conversation.

By contrast, engaging in real relationships creates fans. Fans are more than just loyal customers; they are brand evangelists that do your marketing for you.

Read more:
The Cult of Personality (Part 1)
The Cult of Personality (Part 2)
Breaking Boundaries

The Age of Tribes

Behind every major movement and successful marketing engine there is a tribe.

What is a tribe? Simply put, it is a group of people that connect around a common goal, shared passion, similarities in background or a need for solutions to improve their lives.

The facts are simple: if you want to grow and thrive in today’s marketplace, you must identify, become a member of and lead the tribes that are relevant to your business and your bottom line.Your organization, your business operations and your products or services must be shaped by and around the tribe.

Tribes are ready and waiting for the next big thing that is going to solve their problems, meet their needs or make their lives better. If you’re the one that delivers that idea, they’ll rally around you, spread your message like wildfire and fan the flames of your success. The power and influence you command as the leader of your tribe is unrivaled by any form of traditional advertising.

Read more:
Tribes in Today’s Marketing
Mastering Tribe Marketing
Shaping Business for the Tribe

Following the leaders

If you need living proof that the rules have changed, look no further than the Fame Foundry Podcast. Each month we spotlight the people and companies who are leading the way in setting new trends and redefining how business is done today.

Take, for example, best-selling author and video blogger extraordinaire Gary Vaynerchuk. When it comes to the gospel of personal branding, there is perhaps no one so well qualified to preach as Vaynerchuk, who has not only turned his family business into $60 million-a-year wine empire but has cultivated a following of more than 100,000 for his daily video blog.

For a true testament to the power of Twitter, we introduce you to Comcast’s Frank Eliason – the man behind the Internet’s most advanced social media-based customer service program. Eliason has achieved the impossible by lending a human voice to the cable giant and transforming formerly dissatisfied customers into brand evangelists.

Then there’s the inspiring story of Amélie’s French Bakery in Charlotte, N.C., which defied the unfavorable odds of launching a new restaurant in the midst of an economic downturn by cultivating a reputation for authenticity and a fiercely loyal community of ardent evangelists.

Perhaps you are sold on the importance of social media platforms like Facebook and Twitter, but you’re still dubious of the value of viral video. Meet self-proclaimed “Internetainers” Rhett & Link, whose reputation for creating highly popular video content has brought major brands like Cadillac, McDonald’s, Coca-Cola and Starburst to their doorstep.

Read more:
Gary Vaynerchuk: Profit from Your Passion
Comcast’s Frank Eliason: Creating a Better Customer Experience One Tweet at a Time
Amélie’s French Bakery: Staying True to Success
Rhett & Link: The Business of Viral

More to come

The revolution is far from over, and Fame Foundry is just getting started. Keep reading for more intelligence on the new rules for business growth and what it takes to compete in today’s marketplace.

Is Your Promotion Ready for Prime Time? Seven Make-or-Break Lessons in Staging a Successful Retail Sales Event from Amazon

With the holiday season just around the corner, talk of “Black Friday” and “Cyber Monday” sales have already become practically unavoidable. These two retail sale juggernauts have become so deeply entrenched in our cultural lexicon that they actually shape consumer behavior, as eager shoppers anticipate and plan around their arrival for weeks or even months ahead of time. But what if you want to go your own way? Can you conceive of your own unique promotion that will excite consumers and jump-start spending behavior on par with Black Friday? This was the very challenge Amazon attempted to tackle this past summer with their “Prime Day” promotion. Coinciding with the company’s 20th anniversary, Prime Day was a one-day sale that was promised to include “more deals than Black Friday.” Amazon flooded the marketplace with advertising in advance of Prime Day and whipped up great excitement and speculation among customers about what types of deals might be offered. However, when Prime Day arrived and the sales rolled out, the reaction was decidedly less enthusiastic, with many underwhelmed shoppers turning to social media to express their apathy, disappointment and even downright disgust. In the end, Prime Day was not the colossal failure that the Twitterverse would have you believe. In fact, just a few hours into the day, Amazon sent out a press release claiming that “peak order rates have already surpassed 2014 Black Friday.” Moreover, “Prime members have already bought tens of thousands of Fire TV Sticks, 35,000 Lord of the Rings Blu-Ray sets, 28,000 Rubbermaid sets, and 4,000 Echo devices in 15 minutes. The Kate Spade purse was gone in less than a minute. We also sold 1,200 of the $999 TVs in less than 10 minutes. And there are thousands more deals coming.” While Prime Day may not be the next great retail phenomenon, Amazon’s venture into inventing a new sales holiday offers several valuable lessons in the do’s and don’ts of crafting a successful promotional event:

1. Build buzz around your promotion.

One thing that Amazon did right was building up excitement in advance of the event. They ran advertising for weeks leading up to Prime Day, yet they kept the specifics about the deals that would be offered under wraps, leading to great speculation among Amazon enthusiasts about the kind of fantastic steals they might be able to score. Many of these shoppers even logged on early to try to capitalize on the sale. Any successful promotion starts with hype. You must have a plan in place to build excitement and get people talking so that once it begins, you have a eager customers ready and waiting to jump on board. Of course, hype is just that. It should be the drum roll leading up to the big finish. Otherwise, it’s just an empty promise that will result in disappointed (and distrustful) customers.

2. Deliver on the expectations you’ve created.

By far, the biggest point of failure for Prime Day promotion is that many customers expected much more than Amazon ultimately delivered. The majority of the complaints about Prime Day centered around the lack of perceived value or desirability of the discounted items. Typically, during Black Friday and Cyber Monday, retailers tease deep discounts on highly desirable items (such as TVs, gaming consoles and premium brand products) to get shoppers in the door, counting on them to scoop up other items that they want to unload in the process. But on Prime Day, the best deals centered around Amazon’s own tech gadgets, like their Fire TV stick, Kindle and Echo, while many of the other products that were included, such as dishwasher detergent, socks and even a 55-gallon barrel of lube, were much less attractive and left many customers feeling underwhelmed. Furthermore, Amazon front-loaded the hottest deals at midnight PST, so by the time most customers jumped online in the morning, everything had long been sold out. While Amazon has the numbers to prove they sold tons of item during Prime Day, there’s no denying that, for many customers, they did not meet the expectations that they established in the pre-sale campaigns, leaving the retailer with a major black eye in the court of public opinion. When planning a promotion, be sure that you live up to the hype you create. If your focus is on marketing the promotion instead of on the promotion itself, then you are setting yourself up for disappointed customers.

3. Remember: bigger does not always mean better.

Looking back at Amazon’s pre-sale campaign messaging, you will notice that they refer to Prime Day as being bigger than Black Friday and having “more deals.” Nowhere could I find any mention that Prime Day would be “better” than Black Friday, just that there would be more deals offered, which is a perfect example of the old adage that “bigger does not always equal better.” Item for item, Prime Day may have indeed had more to offer than Amazon did on Black Friday, but that didn’t matter to most customers. People don’t necessarily want tons of options, they just want the right ones. When planning your own promotions, think big, but also ensure that you do not sacrifice quality for quantity. Instead of focusing on offering a wide array of deals, go the opposite direction and think about personalizing your promotion. These days, with the abundance of traffic analytics and customer account data available, it’s easy to know what your customers shop for and purchase most often. Use this information to your advantage and craft customized offers that reward your loyal shoppers with discounts on the things they really want and need. And for goodness sake, notify them ahead of time that their favorite items will be on sale! This is definitely one area where Amazon really missed the boat. After all, who has more customer data and marketing intelligence than one of the Web’s biggest retail giants?

4. Don’t try to please everyone.

The fact that we are talking about all the complaints that people had about Prime Day is interesting in and of itself. After all, this is a sale we’re talking about! People are actually upset that the deals offered weren’t good enough! That’s the very definition of a First World problem and it shows that, no matter how hard you try, you will never please everyone. When planning a promotion, consider your customers and what they want, but don’t get too hung up on trying to include something for everyone. Doing this can force you to go to market with a campaign that is unwieldy and unfocused, and no matter how hard you try, there will always be someone who complains that they did not get what they wanted. Do your best to set and meet expectations, but also be prepared to hear complaints, and accept that this is part of doing business.

5. Motivation is key, and timing is everything.

One of the key reasons Prime Day was not a bigger success is that the motivation behind the event was driven by Amazon, not it’s customers. Amazon decided that they wanted to stage a huge promotion in the middle of the summer to celebrate their 20th anniversary. But what does that have to do with me, the consumer? Nothing at all, really. As Ed Stevens, CEO of Shopatron explains, Amazon’s chief failure was that they neglected to tap into any real time- or emotion-based motivation for their customers: “Prime Day will in no way replace Black Friday. The primary reasons for this include the amount of consumer discretionary dollars in July will not change. Consumers are most motivated to spend their money when it’s associated with an event, and most holiday sales are centered around a sentimental or emotional gift giving component…Prime Day is an unsentimental, ordinary sales gimmick akin to a car dealership having a Labor Day blowout sale.” Everyone knows that the key to making a sale of any sort is to instill a sense of urgency in the buyer. July is far removed from any major gift-giving holiday, so as a shopper, the idea of Prime Day as an early Black Friday is null and void. Unless there’s something I want for myself and happen to find an unbeatable deal on, I’m not likely to part ways with my money on this particular day just because a company tells me I should. When you’re planning your next big promotion, make sure the timing is right, and that you’re tapping into motivations that are relevant to your customer base. If you own a stationery shop, you can run a promotion timed to coincide with brides who are planning for the summer wedding season. If you run a sporting goods store, it doesn’t make sense for you to run a Valentine’s Day sale, but it does make sense for you to plan promotions tied to the beginning of each new sports season for adults and kids needing to gear up for spring baseball or fall football and so on.

6. Make it easy for your customers to participate.

Another one of the chief complaints about Amazon’s Prime Day was the way in which offers were presented: an infinite scroll of items presented five at a time in no particular order which continued on for hundreds of pages. Who wants to wade through that for the chance at finding something they might want at a price they might want to pay for it? If you’re going to run a promotion, don’t make your customers work hard to make you money. People love a good deal, but only to the extent to which it doesn’t cause them an excess of inconvenience. Don’t forget: there’s always a competitor lurking in the wings to give your customers what you fail to deliver.

7. Accept that you will have a target on your back.

With Prime Day well underway and customer reactions starting to roll in, Walmart jumped into the conversation by offering a number of their own “Rollback” deals. They were able to sit back and see what Amazon was doing and then respond in a way that would allow them to try to trump Amazon’s big sale – and for many customers, this move worked as they found (in their opinion at least) better deals on Walmart.com. What does this show us? That the first one to do something is the one with the target on their back! After all, it is always easier to follow rather than to lead. By waiting to see what Amazon had up their sleeve, Walmart was able to evaluate the situation and respond, instead of taking the leap and being first into the fray. This is a reality for any company that forges into uncharted territory, since it allows your competition to learn from any mistakes you make and build upon the path that you establish. Does this mean you should be reactive rather than proactive in your promotional strategy? Not at all. Many companies that were “first in” benefited from that position. eBay was the first company to do online auctions, and sites that tried to follow in their footsteps slowly failed and closed up shop while eBay remains a powerhouse. Sometimes, the first one in wins the day, but other times, they end up being the target that everyone else comes gunning for. Ultimately, though, it’s good planning and solid execution that are the differentiators between a promotion that soars and one that sinks.