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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Starbucks vs. Dunkin' Donuts

With billions in sales annually, coffee industry giants Starbucks and Dunkin' Donuts have demonstrated their ability to push their product in our caffeine-driven society. But when it comes to harnessing the power of the web to cultivate community around their brands, what are these two superstars doing to ensure that they keep and inspire loyalty among their followers, especially in the face of mounting competition between each other as well as increasing threats from newer players such as McDonald’s? Fame Foundry’s agents weigh in below:

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• The Architect

  Starbucks and Dunkin' Donuts’ approaches to creating meaningful community around their brands and extending their companies beyond a typical retail website is as different as their stores. Both websites have menus, nutrition information, online stores, store locators and social links -- the bare necessities for brands of this nature. The similarities end there. Dunkin' Donuts' version of extending itself beyond the walls of its stores is reminiscent of old gimmicks and half-hearted community-building ploys. There's a healthy version of its menu, links to a running site, some promos and a contest, and then we’re done. Dunkin' Donuts provides no opportunity for its fans to be a part of its website in any meaningful way. Starbucks has done better in their attempts. Noteworthy is the idea of improving the company with your ideas -- something that speaks to core fans. If you love the green Starbucks splash stick, then you should know it was developed in this way. The website allows visitors to share ideas, vote on ideas submitted by others and see which ideas have received the strongest response. It promotes community by encouraging visitors to play a part in improving the brand they love through their own opinions and innovations. Second to this, there’s a blog that’s halfway worth subscribing to if you’re an ultra fan. And while it is not exactly groundbreaking, it has a genuine appeal and seems to keep a decent personal touch to it with little of the usual corporate interference on the surface. Introducing new conveniences, products and free offers allows the blog to be something worth subscribing to for core users and brand evangelists. In addition, Starbucks offers a place for those willing to contribute to their causes. It’s not terribly engaging, but having a directory of people bound to stores and allowing for conversation within each store is a worthwhile effort. It needs more work in order to truly establish the store as a gateway to the local community.

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• The Craftsman

  A website should not only be an extension of a retail store, but it should also be the gathering place for your brand's community of followers. It's important to give that community a great experience when they visit your site, and design plays an integral role in that experience. Dunkin' Donuts and Starbucks handle this experience in very different ways, and both leave much to be desired. Let's start with Dunkin' Donuts. It is quite clear that the goal of this site is to push products. The first thing that I notice is the horrible Photoshop work on the home page. It's a collage of poorly photographed and cut out cups, beans and other products. It's obvious that none of the elements ever appeared together naturally. With coffee beans the size of walnuts and cups the size of buckets, the scale is so ridiculous that the whole thing comes off as cheesy and poorly produced. There is a lot of movement and visual stimulation on the home page, including pop-up menus, enlarging images and a hot pink drop-down menu. It seems that at any moment a man wanting to guess my weight or swallow a sword could jump out from behind that burlap sack. These elements are over the top and a detriment to the functionality, as the page takes several seconds to load. The navigation is passable, but there is a lot going on. First you have the main navigation with drop-down menus. Above that you have a secondary navigation that is one of the smallest I have ever seen at only six pixels. I would think that a store finder and franchising information warrants a larger size. And above in the upper right corner there are 4 graphics that appear to be buttons but do nothing when clicked or hovered over, creating confusion. Secondary pages on the site are cleaner, but there are still some alignment and spacing problems, and an overall lack of design consistency makes the site look thrown together. While some pages look pretty good, others look quite bad. On any given page there are several fonts and many colors, causing it to look very busy. Starbucks' website is in stark contrast to the Dunkin' Donuts site. It's clean and minimalist in a way that feels great on the home page, but once you dig into the site, the pages become bland and boring. The home page immediately gives you hierarchy with a large, interactive feature that is simple to navigate. Below that are three areas that funnel traffic with a minimal navigation system. The light background helps the warm, rich imagery pop, creating terrific contrast. Nothing is in your face or obtrusive. It's subtle and functional -- just what you'd expect from a brand like Starbucks. The secondary pages aren't nearly as strong as the home page. The primary and secondary navigation are minimal to the point of being boring. The leading on the navigation and body text is tight and should be expanded. The subtle drop shadow on the top of the canvas area makes that area appear as a frame and does nothing to enhance the page. Columns are narrow, and content feels cramped. There is wasted real estate under a poorly designed search bar which features a "go" button -- none of which feels like what you would expect from Starbucks. There is also a lot of inconsistency from page to page, especially in the way their products and offerings are displayed, which makes the browsing experience feel disjointed. Both sites have work to be done and leave me feeling disappointed. I expect better from these two captains of the coffee industry. While Dunkin' Donuts is over the top with its bright colors and flashy animation, Starbucks doesn't go far enough with its neutral colors and boring framework. Like a cup of coffee that's too strong or too weak, these sites need to find the perfect brew.

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• The Developer

  Anyone who has studied the metrics on their own website knows that getting people past the front page is a big deal, getting them to stay longer is even a bigger deal, and having someone feel that your site is worthwhile enough to come back is the ultimate score. Today's websites are as much about visitors consuming information, collaborating and interacting as a community as they are about selling a product or service.Interestingly, when comparing Dunkin' Donuts to Starbucks, it is clear that both companies have attempted to make their sites into something more than just a reproduction of their retail storefronts. They both have used various methods to try to capitalize on the enthusiasm of their customers. Dunkin' Donuts offers a feature that allows you to create your own donut, while Starbucks has launched a number of social websites that range from promoting specific product lines to advocating social change to soliciting suggestions to make your Starbucks better. Overall, Starbucks does a better job of providing compelling reasons to visit the site. However, both make the perplexing mistake of burying the content rather than bringing it to the forefront. Dunkin' buries these nuggets in favor of button graphics and forces visitors to hunt to find something interesting. Starbucks hides a single text link for each of their social sites below their Flash movie that gets in the way of finding something more useful. Both companies have very active Facebook pages with posts happening every few minutes -- not that you would know this by looking at the front page of their site. What's that you say? The goal is to sell product? Well, I have a question in return: Isn't it necessary to drive traffic to your site in order to sell products online? If there are 4.5 million fans on Starbucks' Facebook page posting every couple of minutes, you do the math. I'll just hold off on returning to these websites until either company gives me a reason to.

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A Tale of Two Tweets – And Five Takeaways for Brand Survival in a Consumer-Driven Culture

It was the best of times…and the best of times. Two very different brands, two very different markets, two very different tweets – but it all adds up to one very big lesson in the power of word-of-mouth marketing in today’s consumer-driven marketplace. Our story opens on October 1, when ESPN NFL Nation reporter Terry Blount tweets a photo from Houston restaurant Skeeter’s Mesquite Grill, where the specials board advertises the “Matt Schaub”: “Pick six toppings for your burger and pay dearly for it.” This clever play on words was a reference to an interception the Texans’ quarterback threw during their September 29 game against the Seahawks – an interception that was returned for a touchdown, turning the tide of the game and paving the way for the Seahawks to claim an overtime victory. The photo quickly rippled through the Interwebs, and over the course of the next three days, this local mom-and-pop eatery received over 400,000 hits on its website, and its managers gave more than 50 interviews to media outlets across the nation, including ESPN’s SportsCenter and Mike & Mike as well as The New York Times and the New York Daily News. From Houston we travel to Richmond, Virginia, where John and Sherry Petersik, masterminds behind the hugely popular home improvement blog Young House Love tweeted a photo to their 27,000+ followers of a package delivered to their doorstep with a little something extra for their famed four-legged family member (coincidentally named “Burger”). But they didn’t just tweet it. They also posted it to their Facebook Page, where they have more than 86,000 followers. And to Instagram, where they have nearly 56,000 followers. Assuming that some of those followers overlap (as they surely do), that’s still a lot of valuable publicity garnered for the price of a dog treat. Even more noteworthy? The many commenters that eagerly chimed in to sing the praises of their own thoughtful neighborhood UPS delivery driver. So what do these moments of marketing kismet mean for you? After all, they are lightning-in-a-bottle moments to be sure. But the point is not to replicate them; it’s to learn from them. Here are five key takeaways that you can apply to help your brand not only survive but thrive in today’s consumer-driven marketplace:

1. Deliver delight.

How much effort did it take for that UPS delivery driver to leave a treat along with the day’s package? How much did it cost the company? Nearly nothing, yet this seemingly insignificant gesture of care and courtesy garnered thousands upon thousands of positive impressions on social media. That’s an ROI that’s nearly impossible to beat. So ask yourself: what can you do to delight your customers? How can you invest a little extra effort, time and thoughtfulness into making their lives easier or bringing a little bit of unexpected joy into their day? Even in today’s tech-centric world, it’s the personal touches that make the most lasting impression.

2. Follow the trickle-down rule of happiness.

It’s a formula as simple as it is true: Happy employees = happy customers. It starts with hiring the right people – people who are the right fit for your corporate culture, who share your passion and your vision and who are driven to go the extra mile. Then empower those people. Make sure they know that you have only one rule when it comes to serving your customers: do whatever it takes to show them that they are valuable and appreciated. When you surround yourself with a top-notch team, you can entrust them to make the right decisions when the rubber meets the road to uphold your brand’s reputation.

3. Know your tribe.

There’s no magic spell you can cast to make your marketing efforts go viral. However, when you know your tribe, you know what they’ll respond to. You know what they’ll find funny or clever or quirky or cool. You know how to stay on the right side of the line between being in on the joke and making a pandering marketing ploy. Skeeter’s hit the right note among their sports-loving clientele with their timely, cheeky special. By having a little fun at Matt Schaub’s expense, they sent a clear message to their base of Texans fans: We know the feeling. We’re one of you. It’s the marketing equivalent of saddling up to the bar with a pint to commiserate over the outcome of the game.

4. The walls have eyes. And ears. And blogs.

Did that UPS delivery driver know that the home where he left the treat for the garrulous Chihuahua was inhabited by bloggers? Probably not. Was he following a PR plan carefully researched and plotted by UPS’s corporate marketing team. Most certainly not. But that’s exactly the point. In today’s era of social media, you should treat every customer as though they’re the Petersiks. Not every one of your customers has their own blog, but nearly every one of them has their own Facebook page, Twitter account, Instagram, etc. Each of these platforms is a megaphone that they can use to sing your praises or rip you to shreds. You never know whose megaphone is the loudest, and there’s nothing people love more than jumping on a bandwagon. Which direction that bandwagon is heading is up to you.

5. Brands are made in moments.

This is a corollary to #4, but in these times when everyone has their own soapbox, brands aren’t defined in board rooms; they’re shaped moment by moment in homes and in cars and on screens across America. Every encounter between your brand and your customers – whether real-world or virtual – shifts and redefines your reputation. Whether your annual marketing budget is in the thousands or the millions, there’s nothing you can do that carries the weight of the word of someone who has experienced your products and services first-hand. So rather than obsessing over every word on your website, put your time and energy where it counts – on the front lines where your brand and your customers come face-to-face.

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