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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Two-Faced: The Promise and Pitfalls of Facebook

With 250 million members and growing, Facebook is a siren’s song for marketers and business owners. Its allure lies in its promise of instantaneous access to legions of followers, but therein also lies the danger. With all the hype surrounding social media, misconceptions about Facebook’s capabilities as a marketing tool are rampant. It’s easy to latch on to the seemingly obvious benefits while overlooking the hidden perils. Before you steer your brand on a course to social media suicide, let’s take a closer look at some of the nefarious half-truths that permeate the buzz about Facebook and sort out perception from possibility.

Facebook is free advertising.

This much is true: It doesn’t cost one dime to create an account or set up a fan page on Facebook. But that’s where the free ride ends. In fact, Facebook is neither free nor advertising. Advertising in the most traditional sense of the word implies one-way communication. It represents a carefully polished, thoroughly sanitized version of a company’s image that is presented to a statistically favorable audience through structured media outlets. Social media by definition demands interaction. As a result, using any social media platform as a tool to grow your business requires a significant investment of time and effort – precious resources of which many companies today have little to spare – to nurture relationships and cultivate a following. You can’t approach Facebook as you would an advertising campaign with tidy short-term objectives and a finite lifespan. Instead, you must be willing to make a long-term commitment and have the patience to let the return on your investment develop over time. Furthermore, unlike traditional advertising, Facebook is not simply a vehicle for self-promotion. Creating a Facebook page is like standing on a soapbox. You can gather a crowd and take the stage, but if you do nothing but talk endlessly about yourself, your products and your achievements, everyone will quickly leave and go elsewhere.

Facebook is an easy way to connect with your customers.

Yes, your 10-year-old son and your 85-year old grandmother can set up a Facebook page. The developers behind Facebook invested untold hours and resources in a simple, user-friendly interface in order to ensure just that. Facebook is not the ends; it's the means. However, the act of creating a page is not the point. It’s not the same as putting up a billboard on the side of the road where the end goal is to gain attention by the simple fact of existing in the space. You must do more than establish a presence; you must commit yourself to being fully present on the site. The gift that Facebook and other social media sites have given to marketers and business owners is removing the middlemen of print and broadcast media that were once your only lines of communication with your customers. However, having the ability to communicate directly does no good if you do not use it to your advantage by actively engaging your followers. How do you do this? Offer them something of value, start a conversation, provide a forum for meaningful interaction, post diverse kinds of content. Put yourself in your customer’s shoes and think about what you would respond to. Think about what all of your fans might have in common and build your following around that. Your Facebook page might not even focus on your business or industry at all. That’s fine, as long as what’s there is entertaining or thought provoking or relatable – something that people can latch onto and encourage others to do the same. In short, Facebook is not the ends; it's the means.

There’s no harm in trying Facebook.

You’ve heard all the chatter about Facebook, and you’ve decided to take the plunge, thinking you’ll figure it out as you go. Stop right there. The problem with taking a trial-and-error approach is that there are no take-backs in the world of social media. Your mistakes are on display for all to see and can be unearthed again and again. Post content that is poorly conceived or badly executed, and you take a chance at being the Internet’s next viral sensation (and not in a good way). Of course, that’s the worst-case scenario. But the indisputable truth of the matter is that your efforts can backfire if you don’t come out of the gate with a strong, clearly defined strategy and commit to sustaining your efforts over time. There are no take-backs in the world of social media. As a marketer or business owner, you can’t afford to enter into Facebook lightly. Lackluster communication will damage your brand. Just as easily as you can update your status, your fans can hide you from their feed. The more eagerly you flood your followers with content that’s not relevant or lacks creativity, the more you risk alienating your once loyal customers. Take a step back and think about how your activity on Facebook reflects on you and what it reveals to your customers about your motives. For example, focusing on self-promotion sends a clear message to your fans that you have no interest in them or desire to forge a meaningful connection. Remember, everything that you broadcast over Facebook becomes part of your brand legacy.

The more fans, the better.

As is the case in most areas of business, there is strength in numbers on Facebook. Or is there? Without question, Facebook has the numbers. Over 50 million new users joined in the past three months alone, leaving marketers who cling to the traditional media metrics of reach and demographics salivating. However, Facebook’s true strength is not in the exposure it offers to this vast sea of humanity. It’s in the platform’s strength as a channel of unobstructed communication between you and your customers as well as between your customers and their network of friends. The number of fans you have on Facebook is meaningless in and of itself. Just as it takes next to no effort on your part to create your page, it requires nothing but the click of a mouse for someone to “fan” you. But if that is the last interaction you have with them, then it does nothing to improve your bottom line. What you really need are loyal fans who are passionate about you and who are actively spreading the word about what you have to offer. You need to develop a following of people who are personally invested in your success. It’s not about quantity; it’s about quality.Wired magazine founder Kevin Kelly describes on his blog the importance of what he calls “True Fans,” defined as “someone who will purchase anything and everything you produce.” Once you have committed yourself to Facebook, it is imperative that you seek out these types of fans and feed them meaningful content that they can spread like wildfire throughout their various networks of family, friends, colleagues and acquaintances. When it comes to fans and Facebook, it’s not about quantity; it’s about quality. All of this is not to say that you shouldn’t view Facebook as a powerful grassroots marketing tool or that the challenges outweigh the benefits. However, it is to say that you shouldn’t blindly follow the masses to Facebook because you think it’s cheap, easy and free of risk. Instead, be realistic about the investment of time and effort required, cultivate a loyal group of real fans and communicate with them in a way that is really engaging. As always, if you’re not sure where to start and need help making sense of it all, please feel free to call us. We can help you separate Facebook fact from fiction and put you on the right track to using social media as a tool for building meaningful customer relationships.

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