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.

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Put Away the Smoke and Mirrors

“Smoke and mirrors.” “Dog and pony show.” “Image is everything.” These phrases, which are deeply embedded in the vernacular and philosophy of old-school marketing firms, may appear on the surface as nothing more than harmless – if hackneyed – corporate speak. However, these seemingly innocuous clichés actually betray one of traditional marketing's dirtiest secrets. Once the clever headlines, catchy taglines and glamorous images are stripped away, all that’s left at the core is fluff, spin, deception and the art of inventing meaning where there is none. Even they don’t believe their own hype. Yet these are the very same people to whom business owners and decision makers have entrusted their livelihood for decades. Who’s to say the interactions you have with your followers can’t be meaningful?At its heart, your business shares the same goal with every other: to grow, thrive and compete successfully in your market niche. In order to do this, you must engage your customers and build a community around your brand. With old marketing, the relationship between seller and consumer has always taken place at arm’s length, using traditional media channels that rely on flash and frequency, that require a tremendous investment to outshine and outspend the competition. However, who’s to say your relationships with your customers can’t be personal? Who’s to say the interactions you have with your followers can’t be meaningful? The answer: No one who values your success over their own bottom line.

Leading by example

We tend to take established brands for granted, assuming the secret to their success lies in their ability to pour unlimited resources into every available advertising medium to broadcast slick, highly polished messages of self-promotion. However, a closer look at some of today’s most recognizable names reveals a different story. Let’s start with Amazon. If you think about it, there is nothing inherently glamorous about an online bookstore. Yet Amazon has managed to create a following so pervasive that it catapulted from an upstart dot-com to one of the world’s most powerful e-commerce megabrands, all without ever relying on pricey TV and magazine ads. “Advertising is the tax you pay for unremarkable thinking.” How did they do it? The answer is not smoke and mirrors. They did not trick anyone into drinking the Amazon Kool-Aid. Rather they committed themselves and their budget to creating a better shopping experience by developing more intuitive technology, stronger distribution networks and more competitive shipping deals. These are genuine and distinct advantages from which their customers benefit each and every time they interact with the brand, thus solidifying Amazon’s reputation for ease of use, low prices and quality service. Another brand that has risen to the top of its category by flying in the face of traditional marketing wisdom is Geek Squad. As founder Robert Stephens explained at Advertising Age’s 2007 IDEA Conference, “Advertising is the tax you pay for unremarkable thinking.” Instead, by taking a creative approach to what he himself calls an innately “boring business,” he has transformed his one-man show into a corporation that employs more than 17,000 nationwide. In an interview with Inc. magazine, Stephens explained his low-budget strategy:

Without spending any money on marketing, we were able to get people talking about Geek Squad by tapping into themes and archetypes people already understood. We embraced the fact that we were geeks, and we dressed all of our employees like 1960s NASA technicians, since NASA is a symbol of problem solving, teamwork and impossible tasks…In our early years, we found that more than 90 percent of people found us through word of mouth.

In fact, he credits his initial lack of monetary resources with forcing him to work harder, to be more innovative, to dig deeper, to develop an original and authentic approach that has differentiated Geek Squad from all other competitors:

At the crossroads of marketing and meaning

So where do these two concepts intersect for you? It lies in the fundamentals. Your business – let alone your category – would not exist if there were not a legitimate need for your product or service among some segment of the population. There is a community out there that is receptive to your message, that is waiting to be wowed with a newer, better way of doing things. Furthermore, your company would not be here today if at some time someone somewhere hadn’t felt passionately enough about whatever it is you do to risk everything to get that company off the ground. It’s time to reignite that passion and convey it in a way that inspires others. Make a conscious decision to be better, to be different. Resolve to enhance your usefulness; commit yourself to unrelenting innovation; make sure you are delivering a premium experience to your customer; then tell people about it in a genuine and compelling way. And that’s where you’ll need help. But you don’t need just any old traditional agency; you need a partner who shares your belief in what you have to offer and your passion for why you do what you do better than anyone else. You need experts that can show you how to communicate this to your audience in a real and honest way, using available technologies to build community among your customers and keep them actively engaged to the point where they include you as part of their identity. When you have something meaningful to say, and you say it with conviction, people will listen. No smoke and mirrors required.

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Naughty or Nice?

If you’re guilty of committing these marketing no-nos, you may well be receiving a lump of coal from your customers this year.

Making constant demands of your customers

All too often, marketers act like petulant children, making incessant demands of their customers without providing any real service or value in return. “Buy now!” “Call today!” “Read this email!” “Share this on Facebook!” All your customers hear is, “Me! Me! Me! Give me what I want right now!” And what’s their reaction to such self-interested yapping? At best, it's a collective yawn; at worst, a complete tune-out. So what should you do instead? Fame Foundry friend Gary Vaynerchuk suggests hitting your customers in the face. Wait…let us explain. You see, about once a week, Vaynerchuk poses this question on Twitter to his one million followers: “Is there anything I can do for you?” And he does mean it literally. For example, when one of his followers in Canada wrote “Just ran out of Tabasco,” Vaynerchuk overnighted eight bottles. Image via Warren Weeks When another in Minnesota responded with a request for a cheeseburger, he opened the door the next day to find a delicious cheeseburger hand-delivered from one of his favorite restaurants. So what’s in all of this concierge-like servitude for Gary? It’s part of an approach that the always-colorful Vaynerchuk calls “jab, jab, jab, right hook” (which is also the name of his latest book) According to Vaynerchuk, a jab is anything of value — a joke, an idea, an introduction, and yes, even a meal. After he delivers a few jabs, he can then justifiably hit you with a right hook: a request to buy something. In other words, “jab, jab, jab, right hook” means “give, give, give, ask.” Note the emphasis on giving. You must give first and give generously before you ever ask for anything in return from your customers and prospects. As he explains in the book, “Your story needs to move people’s spirits and build their goodwill, so that when you finally do ask them to buy from you, they feel like you’ve given them so much it would be almost rude to refuse.” It’s a philosophy as simple as it is effective: put your customers first, and they’ll return the favor. As Vaynerchuk says, “If you’re in business, first and foremost, you have to be nice. Show your customers that you care.”

Insulting our intelligence

It’s 2013. We’ve all seen more than our fair share of advertising. We all have the Internet. So stop insulting our intelligence with your “candid interviews” and “medical experts.” After all, how many mornings have you found yourself leisurely chatting about the joys of breakfast cereal with an unseen interviewer? And, Post Foods, you really cannot be serious with this! Nobody’s buying it, and nobody wants to buy products from companies that don’t respect our ability to discern fact from fiction. If you want to engage with us, authenticity is the only way to get (and hold) our attention.

Playing to dirty motivations

Image via Amusing Planet This one is something of a corollary to insulting our intelligence. We all know that sex sells. We all want to be thinner, richer and more attractive. But we’re also savvy enough to recognize when we’re being manipulated by marketers. Take this ad for the Dodge Big Finish Event, which ends with a keeping-up-with-the-Jonses challenge: “Let’s see the neighbors compete with that!” Is that really the best selling point you have, Dodge? Similarly, this spot implies that the secret to unlocking popularity, confidence, masculinity and sex appeal is the keys to an Audi. If you really want me to drop upwards of $80k on a car, you’re going to need to do better than that. Educate your customers. Show them how your products and services will make their lives better, easier, more efficient or even more fun in a real way. Not in an aspirational, wink-wink, don’t-we-all-want-to-be-Kardashians way.

Committing a blatant money-grabbing maneuver

Contrary to the unforgettable line uttered by the infamous Gordon Gekko in the 1987 film Wall Street, greed is not good. While customers don’t begrudge any company the need to turn a profit, when they smell a blatant money-grabbing maneuver, they’ll quickly blow the whistle. For several years now, major retailers have been attempting to get a jump on Black Friday spending by opening on Thanksgiving day – a move that has been viewed by many as a morally questionable practice of allowing consumerism to encroach on one of our nation’s most revered holidays. This year, however, Kmart took a giant leap over the line of good judgment when they announced that they would open at 6 a.m. on Thanksgiving day and remain open for 41 consecutive hours. The public backlash was swift and sharp. Within hours of the announcement, hundreds of Kmart customers took to social media and threatened to boycott the store if it didn't reverse its decision so that its employees could spend Thanksgiving with their families. People called the decision "heartless," "greedy," "shameful" and "disgusting." Image via The Huffington Post "Shame on you, Kmart. I will never set foot in any of your stores again," wrote one now former customer on the company’s Facebook page. "I have family members that work in retail, and because of greedy retailers like you will not be able to spend the day with us." Another added: “Maybe Kmart should have shown they are thankful for their loyal employees and let them be with their families on Thanksgiving. I realize you are a corporation, and your goal is to make money...but sometimes you need to show and prove that people are important, too." So what lessons can you take away from Kmart’s Thanksgiving PR travesty? In your quest to own your market, always proceed with caution. Today’s consumers are not only smart but selective; they shop with their heads and their hearts. They want to deal with companies that demonstrate their dedication to serving the best interests of both their customers and their employees. They won’t trust their business to those whose only master is the all-mighty dollar, so make sure you always err on the side of ethics and in everything that you do, prove that it’s you who exists to serve the needs of your customers, not the other way around.

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