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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Rethink, Refocus, Reinvent, Rename: 4 Ways to Revitalize Your Brand

Your brand is your identity. Its value is built over time, step by step, brick by brick until it is recognizable, desired and even worn like a badge among your loyal customers. Once it’s established, it becomes the touchstone around which all of your marketing and business growth efforts stem.

But what happens when that momentum shifts and suddenly the value of your brand starts to wane. In a constantly changing marketplace, today’s top brand can become tomorrow’s relic. Your customers’ needs, habits or preferences start to shift. A new competitor emerges in the marketplace. New technology or new trends arise and undermine the relevance of your offering. A negative connotation attaches itself to your good name.

Is it time to just give up and pack it in? Not at all.

It is time, however, to retool your brand. Here are four ways you can approach the rebranding process and rekindle the flames of passion between your company and its customers.

1. Rethink.

Approach your product offering with new eyes, as if you have never seen it before. Forget your past success and look ahead to what it will take to capture a newer, broader buyers' market.

Ask yourself what will make your product relevant to today’s consumer. Does your product promote green living? Does it support a healthy, active lifestyle? Can it create greater efficiencies in an economy where everyone’s looking for new ways to stretch a dollar?

Fast food mega-monopoly McDonald’s is a prime example of how taking a fresh look at your company’s offerings can not only keep you relevant but help you thrive in an ever-shifting marketplace.

Established as a burger joint and maligned by the well-hyped documentary "Super-Size Me" as being synonymous with obesity and grease, McDonald’s took a step back and envisioned a restaurant where healthy offerings such as salads, fruit and yogurt could peacefully co-exist with good old-fashioned fast food fare.

This approach reaped immediate rewards, as customers who had left McDonald’s in droves in pursuit of healthier options discovered that it was finally safe to return to their old familiar favorite Golden Arches.

2. Refocus.

When it comes to rebranding, it’s vital to keep a keen eye on exactly who it is that you want to target.

It’s possible that your sales are flagging because in trying to increase your market share, you lost sight of who it is you serve best. In casting your net too wide, you may have alienated your most loyal customers.

Rebranding gives your company a chance to refocus and retool your efforts specifically to appeal to those who will realistically be most interested in and most likely to buy your products, rather than wasting time and money on a less effective, too-broad business plan.

When J.Crew saw its sales start to decline in 2003, the company hired former Gap CEO Millard Drexler to take action. Returning their focus to a narrower, more upscale clientele, the label began introducing more luxury items such as cashmere and tweed to their line alongside their traditional selection of tank tops and t-shirts. Add to that the endorsement of one very sophisticated First Lady – Michelle Obama – and the rebranding of J.Crew was complete.

3. Reinvent.

Would you believe that Burberry – yes, that Burberry – was once synonymous with gangwear in England? It was – so much so that one English pub even banned anyone wearing the label from entering its establishment.

What happened? In the 1970s and 1980s, the brand became associated with football thugs and hooligans. Imposter garments with the signature Burberry check print were sold to the masses, creating the impression that it was no longer an exclusive brand and undermining its desirability among affluent clientele.

Burberry struck back, relying heavily on a series of endorsements from young, A-list celebrities like Kate Moss, Agyness Deyn, Emma Watson and Rosie Huntington-Whitely to reposition the brand as fresh and appealing.

In addition to advertising heavily in glossies like GQ, Esquire, Vogue and Harper’s Bazaar, they also employ a viral marketing approach, placing ad banners on top fashion websites. Additionally, the brand appears at fashion weeks around the world without fail, hosting their own shows to present new lines, which keeps their name constantly in the fashion press. In doing so, Burberry has reinvented itself and reclaimed its historic stature as a high-end, aspirational brand.

4. Rename.

A complete change of name can be a risky strategy but one that can also be highly effective when implemented with perfect timing and execution.

A great example of how one company changed their fortunes by changing their name is the fast food chain originally known as Kentucky Fried Chicken.

Founded by Colonel Sanders in 1956, the company made the wide-sweeping decision in 1999 to shorten their name to simply "KFC." There are several prevailing theories as to why this change was ordered. Some say it was the desire to disassociate themselves from the word "fried" and all of its unhealthy connotations. Others claim the company wanted to remove the word "chicken" in reaction to pressure from government food regulators upset about treatment of livestock. Still others say the company removed the word "Kentucky" because the name was actually trademarked by the Commonwealth of Kentucky in 1990, slapping all who wanted to use the name with a hefty licensing fee. Whatever the real reason for the switch, KFC was reborn and sales skyrocketed.

Whatever the reasons, if your customers have lost their passion for your products and your sales numbers are feeling the squeeze, rebranding may prove to be just the shot in the arm you need to revitalize your revenues.

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