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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Building a Thriving Community Ecosystem: The Five Essential Elements

What is an ecosystem?

In nature, an ecosystem is defined as “a system formed by the interaction of a community of organisms with their environment.” In today’s culture of the Web, an online ecosystem is essentially the same thing – the organic result of the interactions that occur between the members of a community and the environment that they live in. It cannot be defined in and of itself but only as the sum of its thousand moving parts. For brands that exist in today’s culture of the Web, there is no higher echelon of marketing than establishing your own community ecosystem. Why? Well, it’s one thing to interact with your customers and fans in an ecosystem that someone else has built (e.g., Facebook, Twitter, etc.). However, because you didn’t build the ecosystem, you’re limited to one-off interactions that are structured according to the framework defined by the architects of that community (140 characters, anyone?). On the other hand, however, when you’re the one that builds the sandbox, it’s your party. Your website becomes the place where members of your tribe choose to hang out, to debate, to share and to be inspired by their peers – who, incidentally, are other members of your tribe. Most importantly, their identity as a member of this community is inextricably linked to your brand. It’s a marketer’s wildest dream come true. The process of building a thriving ecosystem is no small feat. Here are the five essential elements that you must have if you want to create a real, organic online community that simultaneously exists for and is a product of your tribe:

Earth: The foundation

Before you can build an ecosystem, you have to lay the foundation. But where do you begin? In our series on understanding and marketing to tribes, we established that tribes form around a shared passion for a specific idea, lifestyle or movement. Therefore, for your ecosystem to thrive, there must be a common thread that draws people in and binds them to the community and its members so that they identify themselves as part of your tribe. Your goal is not to build the next Facebook. People don’t need just another broad-based social network where they can set up a profile and post their thoughts. That already exists in any number of places where they already do those things. What people are yearning for is to be among and connect with other people who share their passions. When you build a community around that passion, they’ll come there knowing it’s a place where they can satisfy that need to belong, where they’ll be among others who speak the same language and where they’re free to obsess over something with like-minded people who won’t mind if they talk ad nauseum about that one particular thing that really stokes their fire. So how do you find that common thread? Think about your customers. What do they love? What excites them? What challenges do they face day in and day out? What do they worry about? How can you tap into those things? The answer to those questions is the foundation for your ecosystem. By identifying the common passion that unites your tribe, you can begin to build a community where great interactions will thrive. Even if your brand only ever lives at the periphery of those interactions, that’s okay. Remember, too, that among those who populate your ecosystem there will be individuals who are already your customer, might someday be your customer or may never be your customer, and that’s okay, too. The fact that you exist at the root of all of it will yield greater rewards than you could ever imagine.

Air: Sharing

The ability to interact with other members in meaningful ways is as critical to the life of an ecosystem as the air we breathe; in its absence, the community suffocates. An ecosystem is not a blog with comments. While commenters may well respond to one another on occasion, these interactions are limited in scope to the content to which they are attached. There’s nowhere else for these commenters to go to keep the conversation going or to talk about a different subject entirely. An ecosystem is not a message board where people come to get help or resolve a problem. Once that problem is solved, they move on and never come back; they don’t identify themselves with or feel any lasting ties to the community. An ecosystem is a place where people can share the things matter to them in ways that are meaningful to them. It starts with being able to establish a profile – one that’s more than simply a name and a photo. You need to give people the ability to define who they are in the context of that community and its foundation. Then they need outlets to share their own ideas, photos and videos and to interact with others around that shared content. It’s this level of highly personalized sharing that forges deep, persistent bonds among members of a community. NASCAR driver Ryan Newman’s Fan Club site is built around keeping its members engaged and active by giving them many different ways to share and interact. They can post their own videos, build photo albums, join the conversation on community message boards and even chat with other members in real time. Again, keep in mind that all the sharing that takes place in your ecosystem may have very little to do with your products or services. And that’s exactly what you want because a community that will thrive over the long haul is one that exists to serve its members, not your brand and your business. As long as you’re the one providing the arena where these exchanges are taking place, you’ll benefit immeasurably from constant exposure and engagement.

Water: Leadership

Good tribe leadership is the water that helps a fledgling ecosystem grow and keeps an established ecosystem strong and thriving. The task of providing good leadership is actually more challenging than it may at first seem. In the traditional world of marketing, everything was centered around presenting a carefully cultivated message and never allowing the customer to see any cracks in the perfectly polished veneer of a brand’s image. But that approach doesn’t work in the world of the online ecosystem. You must be comfortable walking among the members of your community and interacting with them on a human level. You must be willing to drop the corporate mask and be authentic. Think of your role as the leader of your community as being the host of a party. It’s not your job to dominate every conversation or to restrict what your friends are and are not allowed to talk about. It is your job to provide good fodder for discussion, to fill in the gaps when you sense a lull in the conversation and to help everyone feel at home and included.

Fire: Rewards

The members of your ecosystem that make the wittiest comments, spark the healthiest debates or share the most interesting content are the ones that keep the community vibrant. So how do you motivate them to keep doing what they do best? In today’s fame-obsessed culture, everyone wants their 15 minutes of notoriety, and everyone wants to feel like a celebrity in their own circles. People are driven by the opportunity to be elevated to a position of higher esteem among their peers. Therefore, if you want to stoke the fires of participation in your ecosystem, recognition is the name of the game. Give the members of your community ways to participate that are all about them, and then reward them for that participation. Distinctions such as “photo of the day” or “most viewed video” reward the creator by putting him or her in the spotlight. Call them out from the crowd, and you'll feed their craving for more recognition. The key to establishing an effective reward system is knowing what motivates the members of your community. For example, because racing fans thrive on competition, the Ryan Newman Fan Club community is built around a points system. Members who start discussions or who post photos and videos can earn points – or votes – from other members that put them in the running for a spot on the fan club’s leaderboard. Points are tallied throughout the racing season, with prizes awarded to the top performer each month as well as the top overall points earner for the season.

Aether: The essence

Aristotle defined aether as the quintessence – the immutable substance that makes up the heavens and stars. When it comes to online ecosystems, the aether is the intangible element – the sine qua non – that makes being a member of your community something to be desired. Think about the most popular nightclub in town. Why do people go there? It’s not just to listen to music. It’s not just to drink a martini. It’s not just to hang out with their friends. They could do all of those things in any number of places. There’s something in the atmosphere – an indefinable quality – that propels them to go to that one club rather than any of the dozens of others in the same vicinity. Perhaps it’s that when they go there, they’re surrounded by people just like them. Or perhaps they’re surrounded by people that they aspire to be like. Maybe it’s the bragging rights that come with being “seen” in the place that everyone’s buzzing about. Your ecosystem needs the same thing. There has to be some sense of status or value attached to being able to claim membership in your tribe. This is the one element of your ecosystem that you have the least control over. You simply can’t manufacture the essence, nor can you make a proclamation that this is what makes your community special. In fact, the essence can only emerge when it’s allowed to develop organically. When you see members of your community sharing inside jokes, developing their own language, even making plans to meet up offline – that’s when you’ll know you have the essence. The best thing you can do when you recognize it is to subtly encourage those members or activities that you see happening around it so that it continues to flourish.

It’s your sandbox.

The prospect of building your own community ecosystem is certainly daunting. There’s much at stake and many unknowns that you must contend with. In sharp contrast to the world of traditional marketing, there’s a distinct lack of control. An ecosystem can only thrive when allowed to develop and grow naturally and on its own timeline. As soon as you start to restrict or interfere too much, it will wither on the vine. Entering the realm of ecosystem building requires a leap of faith. However, just as building the trust that your customers have in your brand is paramount to the growth of your business, putting trust in your customers is essential to the growth of your ecosystem. If you can relinquish the need for control and truly let the members of your community take ownership of it, you’ll be amazed at the results that unfold. Interactions will become vibrant and nuanced, natural leaders will emerge and the community will truly take on a life of its own. And in today’s marketplace, there is no more powerful force for business growth than a large and engaged community that’s homed around your brand.

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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.

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