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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The Art of Not Talking

Competing for attention in the age of information overload

The barrage of information coming at us these days is constant and unrelenting. From our news and social media feeds to our overflowing inboxes to the screens of our computers, phones and televisions, we’re surrounded at every turn by someone or something vying for our attention and trying to force their voice or message to be heard above the raging din of noise. As communicators, our instinctual response usually goes something like this: be more creative, more outrageous, more entertaining, more shocking – the list goes on and on. We want to make sure that, no matter what, we’re talking louder than all the other guys so all eyes and ears are on us. But what if there’s more to it than just dialing up the volume? What if there’s a better way to stand out from the crowd?

Turn down the volume, turn up the engagement

Normal communication between humans is a two-way street, a give and take. So why should the interactions that occur between companies and their customers be any different? Better customer engagement starts with mastering the discipline of being willing to shut up and listen. Truly effective communication is not just a matter of making sure that our point of view or our sales pitch is being heard. Better customer engagement starts with mastering the discipline of – for lack of a better term – the willingness to shut up and listen. The concept of listening is certainly not new, but in the age of social media when everyone has their own soap box, it is practiced all too infrequently. I was struck anew by this fact a few months ago during a casual conversation with a friend. His family had experienced a couple of rough weeks, thanks to a stomach bug that was working its way through their household, so I asked for an update on how everyone was doing. To be clear: I genuinely cared for and wanted to hear about the well-being of his family. But no sooner had I asked the question than my mind immediately turned to thoughts of my own family and the health issues we’d been dealing with of late. The moment he stopped talking, I launched right into a litany of my own troubles. Whether he was aware of it or not, I had done a terrible job, not only of listening, but of being a good friend. There’s a similar danger when it comes to your company’s relationships with its customers. It’s easy to become so wrapped up in strategizing and crafting the communication that you want to send out into the world that you forget to consider your audience. However, today’s customers won’t stand for being force-fed one-way marketing messages. When they realize that you’ve tuned them out, they’ll do the same to you in return. The likelihood of falling into the trap of narcissistic communication is especially great for well-established companies. When you have a history of success, it’s easy to assume that everyone loves you and you can get by on the status quo. However, past victories are no guarantee of future performance. As soon as you start buying into your own myth and believing your own legend, you’re on the fast track to obsolescence. It’s time to stop talking and start listening.

Tune out the noise and respond to their needs

Obviously, listening is not the answer in and of itself. If the solution were that simple, then this piece would have been called the “art of listening.” Because we are so inundated with information, we’ve all gotten really good at multi-tasking. We maintain a constant juggling act of phone calls, emails, status updates, web surfing and work tasks without giving our full, undivided attention to any one of them. As a result, mastering the art of not talking requires you to do more than listen to your customers. It demands the self-discipline to shut out all the other noise so that you can actually hear what your customers are saying, recognize what they truly need or want and respond to meet those needs. Once you relinquish your tunnel vision about “this is the way we’ve always done things, this is the way we’ve always communicated, etc.” and learn to bow to the wisdom of your tribe, the path to business growth will be mapped out for you. You’ll know how to innovate because your customers have told you. You’ll be in a position to own your market because you’re not just out there making noise, you’re giving your tribe what they really want.

Achieve a better balance

The point is this: obviously there’s a time and place to express who you are, what your company stands for and what you have to offer. But don’t let that supersede the need to listen and listen well. Focus on the quality of your interactions, not the volume. Whatever you do, don’t equate the ability to make noise with the ability to get and keep customers. All too many people want to boast about how many times a day they tweet or how many different social profiles they maintain, but sheer volume means nothing if the information you’re broadcasting is mostly worthless and the quality of your interactions is shallow and superficial. Instead, concentrate on being a balanced communicator. Speak when necessary, listen voraciously and respond generously. Your customers will thank you with actions that amount to much more than just words.

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