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.

In It to Pin It: 8 Ways to Win New Customers with Pinterest

A Pinterest-ing development in social media

The results are in and they’re rather stunning: Pinterest is now the third largest social network in the U.S., right behind Facebook and Twitter (Google+ who?). Moreover, a recent study by BlogHer showed that women trust recommendations from Pinterest more than any other platform. Not too shabby for a network that’s barely two years old and still in an invite-only open beta phase.

The basic mechanics of the site are simple. Members (known as “Pinners”) can establish a profile and “pin” all the cool, funny, trendy and inspirational things that they find in their online travels to digital bulletin boards, where images (and their associated links) are bookmarked. Pinners use these boards to visually document anything and everything pertaining to their interests, whether those interests entail fashion, home décor, food, parenting, wedding planning, tech gadgets or cars.

As you’d expect from any social network, pinners can follow each other. They can also “repin” other users’ images as well as like or comment on pins. Naturally, there’s also integration with the other Big Two, with the option to share links to pins on Facebook and Twitter.

More interesting is the question of why the site has caught fire so quickly. The primary reason lies in its anatomy. True to its name, Pinterest creates a highly streamlined experience for its users that is curated according to their interests. Unlike Facebook and Twitter, where users have to sift through every photo and status update from those they follow in a linear fashion, Pinterest users can focus solely on their hobbies without their feeds being cluttered with information that holds no value to them.

The most important question, of course, is how you can harness the power of this explosive new social network to grow your business. To answer that question, here are eight ways you can use Pinterest to win over new customers and fans:

1. Tap into what people love.

Before you dive in, take some time to study the ecosystem and how its members interact. One of the greatest advantages of Pinterest from a marketing perspective is that the community is very open, so it’s easy to see who’s influential in a certain area of interest and what types of content generate the most repins and comments.

By monitoring these trends, you can identify where the best opportunities lie for your brand to create the kind of content that your customers crave.

2. Focus on values, not products.

Think your brand isn’t a good match for an image-driven platform? Don’t be too quick to dismiss your Pinterest potential. Plenty of brands that don’t seem like the most obvious fit for Pinterest – from GE to Kotex – have found creative ways to leverage the platform to engage with customers.

The key is focusing not on your products or services but on the core values that define your brand. Organize your boards around these pillars of your brand and share things there that anyone who shares that common interest or passion would enjoy. Make sure to offer a healthy balance of content that includes your products where relevant but also great stuff from across the Web as well as repins from other users.

Whole Foods Market, for example, has quickly emerged as a Pinterest rock star using this approach. The company’s core values include caring about the community and the environment, promoting healthy eating habits and providing education about good nutrition. Drawing upon these values, they’ve created a diverse collection of boards –ranging from “Who Wants Dinner?” to “Winter Entertaining” to “Super HOT Kitchens” to “We’re Used to Reusing” – where they share content from a wide array of sources that collectively represents the Whole Foods lifestyle.

3. Tell a story in pictures.

Unlike Facebook or Twitter, Pinterest is image-based rather than message-based – which is one of the key reasons for its success. When users scroll through feeds or boards, they’re presented with a simple, uncluttered interface that includes a stream of pictures interrupted just slightly by a brief caption below. As a result, to be successful, it’s important to ensure that the images you pin to your boards tell the story of the content they represent in a visually compelling way.

For example, if you want to share a link to a post from your blog on Pinterest, you need to make sure it includes a powerful image that encapsulates its key theme or message and is also intriguing enough to prompt someone to click through to see the full story.

Keep in mind, too, that when followers re-pin your images, they can change the caption. As a result, it’s important that the images you pin can stand on their own outside the context of your brand’s boards so that they continue to convey your message and values as they are repinned from one board to another.

4. Be a participant, not just a contributor.

Creating boards that offer great curated content organized around your customers’ interests is a good first step. But as with any social network, to get the most out of your presence on Pinterest, you must also listen and engage, not just broadcast.

Repinning other users’ content to your brand’s boards demonstrates that you’re there to do more than push your own agenda by elevating those who have something interesting to offer on your topics of interest. Likewise, following other users’ boards and commenting on others’ pins is an effective relationship-building tactic that can draw new eyes (and potential new customers) to your own boards.

5. Let your customers create content for you.

Pinterest makes it easy to crowdsource content. All you have to do is create group pinboards and invite other users to pin content to those boards – a great way to spark engagement with your brand.

You can also use group pinboards as a springboard for contests where you ask customers to pin pictures of themselves using your products, with prizes for the most creative, innovative or inspiring images. It’s a win-win strategy for both your brand and your customers, as your customers can enjoy a turn in the spotlight while you can promote your products in a tasteful way that’s very palatable to the community.

6. Diversify your boards.

Another element that differentiates Pinterest from Facebook and Twitter is that users have the option to follow specific boards in addition to following users. This means that a user may elect to follow just one or two of your boards rather than everything you post.

While this may initially seem like a disadvantage to you, it’s actually a benefit. Why? Because it means you don’t have to worry about limiting your content to only that which offers the broadest appeal. Instead, you can tailor each board to fit a specialized interest.

Returning to our Whole Foods example, each of their boards is tailored to a fairly narrow area of interest, whether that’s recipes, seasonal entertaining, home décor, DIY projects, gadgets or books. While all of these boards may not appeal to every Whole Foods customer, by providing such a wide array of boards, the brand has greatly increased its chances that every customer can find something that resonates with their interests.

7. Make sure your great content can be found.

If you’re investing the resources required to create and curate interesting content, you want to make sure it can be found by the greatest possible number of customers and potential customers, right? The good news here is that there are tactics you can use to boost your odds.

First, just like Twitter, Pinterest supports hashtags. Tagging each image with the central idea or theme of your board will increase its chances of being found in search. Additionally, the sharing tools built into Pinterest automatically pick up these hashtags and include them when users share your content on Facebook and Twitter.

Also, make sure when possible to form the name of your boards around keywords. For example, West Elm offers home décor boards organized around specific color palettes (“Coral,” “Aquamarine”) and patterns (“Stripes,” “Chevrons”). By naming their boards according to these keywords, West Elm helps lead users who are looking for decorating ideas focused on that color to their boards.

8. Turn pins into traffic.

Don’t overlook the opportunity to use Pinterest to drive traffic to your website. If you pin cool imagery and interesting content from your site to your boards, you’re basically seeding Pinterest with a lot of links back to your site.

You can also add the “Pin It” button to your site right next to your other social sharing buttons in order to make it as easy as possible for visitors to add images from your site directly to their boards.

And if something either you or one of your customers pins happens to become incredibly popular? Think of all the potential clicks back to your site!

Dos and Don'ts for a Successful Groupon Promotion

Do: Be aware that it’s not for everyone, and it may not be right for you.

With a subscriber base that has surpassed 85 million and shows no signs of slowing, the allure of Groupon is hard to resist. The basic premise seems fail-proof: create a discount offer that’s broadcast to thousands of potential new customers, sit back and watch the dollars roll in.

However, every business model is unique, and there are many variables that determine how well your company can respond to a sudden, short-term influx of traffic or a temporary drop in profit margin.

Running a promotion is particularly risky for companies in Groupon’s bread-and-butter categories like salons, spas and restaurants, where the frequency of offers dilutes their perceived value.

If your business falls into one of these categories, you must carefully weigh the chances of being able to convert first-timers into regular customers versus the likelihood that they’ll simply wait for the next Groupon to come along. If the odds don’t stack up in your favor, you may find that the sacrifices you must make to execute the promotion won’t ultimately deliver a long-term pay-off in the strength and size of your customer pool.

Don’t: Expect Groupon to boost your bottom line.

At least not right away. While there’s no upfront cost to run a promotion, Groupon requires you to discount your products or services by at least 50 percent, and they then typically take a cut of 50 percent of the final selling price, leaving you with only 25 percent of your normal revenue. While you’ll undoubtedly see a major bump in traffic, your margins on that traffic will be slim, if they exist at all.

Playing the Groupon game is less about building profit and more about gaining mass exposure.

Do: Crunch the numbers.

When deciding whether or not Groupon a good fit, you must weigh the ROI of your promotion according to the same metrics as you would any other marketing tactic.

Examine every scenario to determine what your promotion will ultimately cost. What if 100 people jump on your deal? What if it’s more like 1,000 or 10,000? Can the potential benefits justify that level of investment? Or would your money be better spent elsewhere, such as a pay-per-click advertising campaign?

Do: Be strategic in your offer.

If you do decide that Groupon is a good fit for your business, make sure to structure your promotion so that it’s a win for you and your new customers.

Be creative and find a way to build an offer that minimizes the losses you must absorb and maximizes your ability to fulfill a short-term spike in demand. Focus on the products or services where your overhead is lowest and your profit margin is highest.

For example, let’s say you’re a personal trainer. If you offer a Groupon discount on your consultation services, you’re limiting the number of hours you have available to clients who are willing to pay your regular rate. However, let’s say you’re a personal trainer who also sells subscriptions to an online video coaching series. You can absorb an almost unlimited amount of cut-rate subscriptions without compromising your primary revenue stream.

Or, let’s say you run a beachside bed and breakfast. Executing your promotion in the off-season is a great way to reel in new visitors. If your doors are open, your operating expenses are fixed. In terms of defraying those costs, it’s better to be filled to capacity at 25 percent of your standard rate than to have only one or two guests at full price.

Don’t: Be afraid to negotiate.

A lesser-known secret of playing the Groupon game is that you can negotiate. When it comes to shaping your promotion, nothing is written in stone.

You can score a more favorable split on the take than 50/50. You can also cap how many discounts are available, which is a good way to safeguard your bottom line and make sure you don’t end up with more business than you can reasonably handle.

Groupon’s entire business model revolves around presenting great deals that people want to buy, so if you’ve got a good one, make them play ball. If they won’t agree to terms that work for you, either try another daily deals site, or pursue a different marketing strategy entirely. No amount of exposure is worth an arrangement that could potentially sink your business.

Do: Pay attention to the fine print.

Terms and restrictions can make or break your deal. Use the fine print to make sure your offer is one that your business can sustain.

Set an expiration date. Cite whether the offer includes tax and gratuity. Specify whether customers need to make an appointment or reservation in advance to use their Groupon. Determine which products or locations the Groupon applies to. Define whether the Groupon can be used in conjunction with other offers or specials. Limit how many offers can be used per customer and per visit.

Just be careful not to make the terms so restrictive that the promotion loses all value to your potential customers, or your Groupon will be a flop.

Do: Put your best foot forward.

When your Groupon lands in the inboxes of subscribers in your area, you’ll inevitably have an influx of potential new customers checking out your website, your Facebook page and your Twitter feed to find out more about you.

Make sure that your website is up to date and that it showcases the products or services being featured in your promotion in such a way that makes the decision to buy an easy one.

Make sure as well that your Facebook and Twitter streams are primed with interesting content and lively dialogue to boost your chances of scoring a like or a follow from these new visitors.

If you don’t have these critical elements in place before your Groupon hits, you won’t be making the most of the opportunity you have to be in front of hundreds or thousands of people who are in the market for what you have to offer.

Do: Understand that these are Groupon’s customers, not yours.

Due to privacy laws, Groupon cannot share the email addresses or personal information of those who have bought into your deal. So while you’ve gotten great exposure to these potential new customers, you have no built-in way to make a repeat appearance in their inbox.

Make sure that when these shoppers visit your website or come into your store, they have the opportunity (and incentive) to join your mailing list. If you don’t already have a list, now is the time to start building one.

Do: Bring your A-game.

The true value of a Groupon promotion isn’t getting a tidal wave of people through your doors. It’s the opportunity to convert those one-time deal-seekers into loyal customers and fans.

In order to do that, you must wow them. They may come in looking for a bargain, but if what they find is exceptional quality, value and customer service that go above and beyond their expectations, they’ll not only be more likely to come back and pay full price but also to spread the word about you as well.

Do: Make sure everyone’s on the same page.

One sure-fire way to guarantee that your Groupon customer will never come back is to make the process of redeeming their offer a hassle.

Hold special meetings or training sessions if necessary to make sure that everyone who’s on the front lines of your business understands the terms of the offer and how to handle any questions or complaints.

This is also a good opportunity to review your customer service standards and reinforce your expectations to ensure that everyone is prepared to do whatever’s necessary to convert, convert, convert.

Don’t: Alienate your loyal customers.

You know the old saying about new friends and old friends – one is silver and the other is gold. The same applies to customers.

In your efforts to bring new customers in the door, be mindful not to alienate those who’ve been happily paying full price all along.

If you’re going to Groupon, it’s an opportune time to simultaneously execute a customer appreciation promotion to reward these customers for their loyalty and show them that their business is always valued.

Don’t: Mistake Groupon for a marketing plan.

Let’s say you run your first Groupon promotion.Groupon is no substitute for a sustainable, long-term business growth plan. You get a huge response, so you stock up and staff up to meet the demand. The wave comes; the wave goes. Suddenly you’ve got a bunch of employees standing around staring at each other and more inventory than you know what to do with.

While running another promotion seems like the obvious solution to this problem, it’s no substitute for a sustainable, long-term, diversified growth and marketing plan.

You must realize that creating one Groupon offer after another will train old and new customers alike to expect never to pay full price and will ultimately devalue your products and services. You’ll end up caught in a cycle of dependency on discount shoppers and razor-thin margins that will make it next to impossible to ever actually grow your business. And isn’t that the point of running a Groupon to begin with?