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.

Mastering Tribe Marketing

Introduction

In part one of this series, Tribes in Today's Marketing, we established a foundational understanding of what tribes are, how and why they form, how they've evolved and how this has redefined the marketplace.

Now we turn our attention to how business growth is achieved today by identifying, understanding, joining and, in due time, leading the tribes that are relevant to your business and your bottom line.

Identify your tribe

When you are marketing your product or service, you strive to understand your target audience. Certainly you can map out the usual demographic variables – age, gender, income and location. These are easy to understand, but to participate and ascend to leadership in your tribe, you need more.

Chances are, your tribe doesn't exist around your direct offering in and of itself – either specifically around your brand or even your product or service in the generic sense.

More than likely, your tribe will coalesce around an idea or value that surrounds your product – whether it's the convenience it provides or the aspect of a lifestyle that it affords.

If you sell golf clubs, the task of identifying your tribe is fairly straightforward. Your tribe is passionate about golf, about improving their game and about having the latest in golfing technology.

Perhaps you're an organic grocer. Your tribe is comprised of people who are conscientious about good health and nutrition and about supporting farmers who grow more natural, healthful foods. These are the people that are ready to take your message and set it on fire.

However, many times the tribes that drive organizations and their products operate at a different level.

If you own the corner coffee shop, you most certainly have something to offer the tribe of people who appreciate good coffee. But perhaps the atmosphere of your shop taps into the passions of a tribe that aspires to lead a cosmopolitan lifestyle. If you sell fair trade coffee, your products might appeal to an entirely different tribe – one that is sensitive to geopolitical issues.

Many times, tribes are about a state of mind. They are comprised of people who live a certain way and who care about certain things. In this way, the challenge is not so much about analyzing demographics but identifying those whose shared passions align with yours.

Locate your tribe

Tribes are never static. They exist with purpose. They are living life and solving problems. In order to continue being relevant to and meeting the needs of their members, they must evolve. This requires a platform – if not multiple platforms – where they can meet, discuss and debate ideas, share news and continue the ongoing conversation around their passions.

They're on message boards; they're talking in forums; they're in the blogosphere; they're connecting with each other on Twitter. In some cases, they're even gathering and meeting in person.

Most of the time the communities that you are looking for are not centered in one place, and there's rarely an obvious sign that reads, “This community lives here.” If you sell coffee, you can't just go to coffeeisgreat.com and find people who are talking about how much they love coffee. However, if you've identified your tribe as well as their passions, needs, wants and fears, it's a lot easier to find them.

Interest-based tribes vs. relationship-based tribes

So far our focus has been primarily on interest-based tribes, which form when people connect around a shared passion. However, social media allows for a new type of connection and thus a new type of tribe – one that forms based on how its members know each other, whether through work, family or location.

These organically created tribes are not bound by any one common interest but rather by the shared goals and interests of life that are relevant to us all. We turn to these tribes for help getting things done, for solutions to everyday problems and for guidance to improve the quality of our lives and the lives of those around us.

Relationship-based tribes and local business

The power of these types of tribes is fairly significant when you consider the nearly limitless aspects of life that we all have in common. Most of us get haircuts, wear shoes, do laundry, watch TV, pay utility bills, buy groceries, own cars, improve our homes, raise children – the list goes on almost indefinitely.

For all of these things, we rely on our tribes of family, co-workers and neighbors for helpful advice and recommendations. As a result, small businesses have a tremendous opportunity to thrive within these tribes if they know where and how to find them. The answer is social media.

For example, if someone has a wonderful experience with a local mechanic, they don't log in to greatmechanics.com and evangelize for Mike the Mechanic. They do, however, tweet about the great service they received. They might even take this one step further and make Mike a member of their online community by connecting themselves with his business page on Facebook and sharing his website with friends living nearby.

In fact, it is not uncommon for the genesis of an interest-based tribe to start with relationship-based tribes talking about a brand and sharing its message.

In other words, if you connect with members of 50 family-based tribes, inevitably these people will connect to form their own community, and your message will begin to spread virally, feeding off of its own momentum to foster the growth of an interest-based tribe.

Become a member of the tribe

Membership doesn't begin the day you start participating in the conversation. You must earn the respect of the tribe in order to become one of them.

Don't come in and immediately start selling, or you'll be ousted swiftly and permanently. Better yet, don't even start by speaking. Listen first and gain insight into the culture within.

Most tribes have evolved over many years and have developed their own rules, perspectives and goals, and building credibility requires an appreciation of these nuances. Read through past conversations to understand the history and the passion surrounding the issues. Learn what's funny, what's serious, what's cliché, what's typical, what people want and what turns them off.

When you do start participating, the one and only rule that applies is to be real. Don't approach the conversation as a self-motivated, faceless corporate salesperson. Come to serve the tribe and its goals. Be yourself – a person with a budget, family, needs, problems and passions just like everyone else.

If you are in the business of doing what you love and you believe in what you do, then talk about it honestly when the time is right without bias or agenda. You must become a trusted member of the tribe before you can begin leading it.

Rule the tribe

The process and path to tribe leadership is unique for each community. However, all tribe leaders posses certain qualities that allow them to ascend to the top.

They are fearless. They are innovators. They challenge the status quo. But, above all, they have built a consistent reputation on standing for the tribe.

As time goes on, after you have proven that you are driven first and foremost by the advancement of the tribe, you'll gain footing as more than just another trusted, non-biased member. The tribe wants to know that you're listening and leading. They want to know that someone is there who genuinely cares about meeting their needs. If you can earn that level of trust with them, they will not only buy from you every time, they will spread your message like no marketing campaign ever could.

This is where tribe leadership truly runs contrary to business models rooted in decades of traditional marketing.

Today, it is more important to be trusted than to sell. Tribes are founded on trust, and trust cannot be achieved with the tactics of old marketing. It is true that tribe leadership and direct selling can both generate sales revenue – at least in the short term. However, while gaining the trust of your tribe is the more indirect path, in the end, the organization that makes a long-term investment in tribe leadership will ultimately achieve the greatest number of sales and claim ownership of the market.

In part three of this series, we'll cover how the influence of tribes extends beyond promotion and actually shapes how business itself evolves around the tribe.