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 Cult of Personality (Part 1)

Word-of-mouth advertising has always been a marketer’s most powerful tool. It is the original form of viral marketing, offering all the key elements required to win a new customer:

• Attention
• Need fulfillment
• Trust
• Trial and testimonial
• Credibility
• Memorability
• Honesty (in other words, the absence of a company or salesperson’s motivations)

Now that social media has become a staple of our culture, word-of-mouth advertising has been catapulted from a nebulous ideal to an essential element for success. Whereas once it represented a one-to-one interaction, today's consumers are armed with a virtual megaphone to reach far-flung groups of friends, family and colleagues instantaneously via major social networking sites. A mention of your brand on the Web is broadcast in real time, delivered to countless phones and inboxes, forwarded, marked, tagged and cataloged on permanent record. Information, misinformation and opinion can make or break your brand at the speed of light. Sounds scary, right? It can be. But you can also choose to use these platforms to your advantage and become part of the dialog rather than social media roadkill.

Traditional marketing and PR are not equipped to survive in the social media jungle.

The practice of public relations has been transformed from representing brands and generating “buzz” through third-party media organizations to a meaningful, direct and ongoing relationship with the public. Ironically, traditional marketing has never faced the challenges inherent in interacting with the public directly. It thrives on comfortably interfacing on its own delicately crafted terms –pristine, airbrushed ads, cinematically perfect commercials, scripted speeches and thoroughly edited press releases. Even traditional PR – whose primary function is theoretically to garner attention through a non-biased press – is regarded as a joke. In our media-savvy times, people are hip to the fact that much of the press is bought and sold. Editors and producers are hungry for stories to balance out the “hard news” which, if left alone, would either bore or depress everyone to tears. The passing along of favors between PR agents and the press leads to the perpetual spinning of cotton-candy puff pieces under the guise of reporting the news. There’s a lot of back scratching going on, and the result is a hands-off, sterile approach to the public that is devoid of integrity. What’s amazing is that traditional marketing companies still think that these news outlets hold the same kind of reverence they did in Paul Harvey’s time. And the media wonders where their credibility went, along with their advertising dollars, as they fight to stay alive and relevant.

PR done right: It’s about people.

People do not follow companies. People follow people. Until this is understood and represents a fundamental principle that drives all of your PR efforts, credibility through social media cannot be attained. People do not follow companies. People follow people. Effective word-of-mouth engagement is, by nature, anti-corporate. The public has no affection for the face of corporate America. No one wants to see standard form-letter responses and press releases on Facebook, Twitter and the like. Yes, you should plan your PR goals and resources with as much care and attention to detail as any other part of your business. A qualified Internet marketing advisor can help you develop a strategy that is business-oriented and aligns with your marketing plan. However, once you have those clearly defined goals in place, you must stop being corporate and start representing your brand on a personal level. Social media is all based on interaction between people, a requirement for the ever-so-valuable word-of-mouth advertisement to exist and spread. The company that takes the lazy or safe road will fabricate a personality that shows the world the face they want the public to see, but this artifice will be found out quickly. No one will invite them back to the conversation. In fact, they will be banned from the conversation. The effect is similar to an uninvited party guest. The only difference in this case is that the uninvited guest is a programmed corporate mascot who has no familiar personality, tells bad jokes and is oblivious to the fact that the brand it represents is a joke.

Be real, flaws and all.

If you’re representing your brand in a personal manner, then be prepared to be honest through and through. The very idea of this is enough to scare a traditional marketing firm to death because there’s no control, and in the absence of control flaws will emerge. Consider the potential PR disaster that could result from this comment:

“XYZ company didn’t get my order right and they suck.”

What to do? A good Internet marketing firm advises the honest approach. People are willing to understand and forgive those that have maintained an honest face to their public. The Internet marketing superstar responds, “We absolutely messed up, and we’re so sorry. Sometimes things get ahead of us, and we make mistakes. Let us make it up to you; we want our customers to be happy and satisfied.” Granted it’s not a one-size-fits-all approach, but you can turn negative feedback into renewed customer loyalty if you have laid a foundation of being yourself. Take for instance what Flickr wrote to its community when it messed up: http://blog.flickr.net/en/2005/07/21/sometimes-we-suck/ This is where Main Street businesses, who value and cultivate relationships with their community as a whole and each customer individually, can ultimately triumph over corporations, who rely on form letters and canned responses that hold no value in the public eye.

Have a reputation for giving.

Being a friend and building a relationship demand more involvement than merely being present. You must participate and give. Share your time, your action and your help. Answer questions. Lend a hand. Be funny. Reveal your passions. Offer a smile and a pat on the back. If you are a dentist, offer free tips and answers to questions about regular dental care. If you make custom stained-glass windows, then take pictures of your art and share them with people. If you’re a real estate agent, offer advice on beautifying your landscaping to add value to your home. Earning a friend online is no different than earning a friend face-to-face.Your most meaningful personal relationships tend to be with people that are unique, interesting, consistent, funny, helpful, honest and witty. To successfully use social media as a PR tool, you must identify these same qualities in your company or your people and engage with the public in ways that demonstrate these strengths. Earning a friend online is no different than earning a friend face-to-face. Also, be consistent with your participation. You, your people and your Internet marketing agency need to be there every day – accessible and responsive – without fail. If you can’t be a friend to the public, then they won’t be your friend in any online relationship. They will not know you, you will not earn their trust, and you will be banished to the world of paid advertising on the sidelines of the conversation.

Develop your personality.

As with all relationships, people will get to know you better as time goes on. Your public persona will grow and mature. Familiarity will develop among everyone connected to you. Inside jokes will form. Achievements will be celebrated. Memories – good and bad – will be carried in the circles of people you interact with in your community. As your public comes to know more about you, your levels of meaningful interaction will increase. As time goes on, more of your personality will shine through as you relate to people who share similar interests and situations. Don’t force your personality into something it isn’t. Let things happen naturally.Your audience will continue to grow as well. You will interact with more people and at different levels of interest and engagement. A core fan base will begin to form. As your audience grows, you will have different types of interaction with your public based on how long they’ve known you and the level of engagement they have with your brand. This is an important step in the development of your voice. Don’t force your personality into something it isn’t. Let things happen naturally. Meet regularly to discuss what’s happening and how things are evolving. If you have multiple people or departments interacting with the public, then everyone must be organized and allowed to be themselves at the same time.

Get started now!

Websites do not magically generate traffic. Brands do not develop a following because they exist or because they simply fulfill a need. You must invest in relationships outside of your site for your public to begin interacting with your site, its content and then your direct offerings. Once you’ve proven that you can build relationships in other places, your followers will begin to want to hear from you directly and join in the conversations taking place on your site. However, even when they become regular subscribers, your relationship-building efforts should not stop there. Manage the conversation on your site as you do within your social media circles. Your commitment to interacting with the public who are engaging with your site must grow to match your commitment to building your site’s content and reputation (read more on the Web Marketing Universe). What does all this hard work and earnest effort yield? Genuine and memorable relationships – both with individuals and with the community at large. A word of caution: Rarely in the beginning will your efforts result in direct sales. However, you will build a solid, long-term foundation in awareness, trust and loyalty for your brand. When someone asks your subscribers if they “know a guy,” they’ll have an answer, a brand, a name they trust, a site address and a link to forward. In time, you will have a great reputation within your community. Competitors will be playing catch-up and struggling to compete against a trusted name – a difficult and expensive endeavor.

Shift your investment.

If this seems daunting – it is. However, much of the traditional advertising budgets of old are being cut and redirected to more productive ends. Consider realigning your marketing dollars to channels where the people are. Social media is a long-term investment.As with all Internet marketing and development, social media is a long-term investment. Success requires hard work, patience and commitment – all things that traditional corporate thinking with its penchant for straightforward, quick fixes doesn’t allow. However, that’s also why stodgy corporate diehards will be relegated to the antiquated methods of carpet-bombing, interruption-based advertising as the penalty for not allowing real people to engage real future customers. Using technology is important, but not at the sacrifice of the personal touch. This is where a good Internet marketing agency shines. Its goal is to help you evolve the ways in which your brand is represented to the public. In addition, a good Internet marketing plan allows for quality interaction at many different levels. A national brand, regional chain or the local bakery must differ in their approaches. Again, social media is never a one-size-fits-all solution. If you are going to take control of your fate with the public, you cannot cut corners, or you will be found out and exposed. No matter the level of business planning behind the scenes, stick to your fundamental principles: be real, be consistent and give generously. If you start today, years from now you’ll be glad you did. The decisions consumers make today are based on relationships forged years ago. Remember, real relationships create fans. Fans are more than loyal customers; they are people that do your marketing for you. In part two of this series, The Cult of Personality, we’ll be sitting down with Eliza Metz of Lime & Violet to learn how a simple idea grew into a yarn empire.

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