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.

---

The Web Marketing Universe

Confusion about successful web marketing is rampant. Even for those in marketing, there's an ongoing war to maintain clarity about how the web universe works and how successful web marketing is executed today. Building an outperforming web platform is very much like building and running a retail store whose primary objective is providing a product or service.

• The store must be attractive, have a good location and be unique to attract visitors.
• The store’s layout, personnel and operations must serve the customer and make the sales process as easy as possible.
• The experience must promote the visitor to return to the store.
• The experience must transform the visitor into a customer.
• The experience must provoke visitors to tell others.
• The experience must promote customers to become repeat customers.

And while the foundational recipe for a successful website is very similar, getting there is completely different. Life happens faster online. While visitors peruse a physical store, website visitors “use” an online store. They can leave just as easily as they walked in. Their attention spans are much shorter, and their tolerance for a confusing layout or arduous pathways is low. There are no roads leading to the Internet storefront. The idea of “getting there” is completely different. The straightforward “location, location, location” mantra is replaced with a myriad of new approaches and considerations to gain the foot traffic you need to be successful online. So, from the never-ending minutia of terminology, buzzwords and techno-jargon, let’s clear the air for once and get some things straight about what makes a successful web marketing machine.

Metrics

Before anything is done, before the first photo is taken, before the first line of code is written, you must take account of what you know. In the web world, everything is in the numbers. From the unaware prospect to the loyal return customer, all possibilities and measurements must be mapped out within the sales continuum. Where do your customers come from? How much does the average customer spend with you in a year? How much is spent to gain one customer? What has your past advertising and marketing efforts yielded? Who are your repeat customers? Why do customers come back? Why do customers leave? Are you doing everything you can to measure all elements that directly and indirectly affect sales? There is much inventory and soul-searching in identifying your metrics. You must be honest about what you know and what you don’t know. You must be critical and able to grade yourself. Doing the homework here will not only guide the purpose of all your web marketing efforts, but also allows you to measure your return on investment, make adjustments and out-perform your competitors.

Utility

In the vastness of the Internet, there are two classes of websites: the digital brochure and the utility site. Most websites are the first kind––the online equivalent of a printed flyer. Yup, all the computing processors, memory, software, hardware, power and communication lines for people to read the same information that they would get from a brochure. The brochure site states its case, makes its pitch and then its done. That’s what many companies do with their brands on the Internet, and their website’s performance is a reflection of it. Your website needs to be useful, not just informative about your primary business objective. Many websites waste inordinate amounts of time and money promoting a site with no utility. Its visitors see no reason to return, and it dies right there. The precious opportunity to turn a casual visitor into a return visitor—the web version of true branding—is sadly wasted. Your website needs to find its place on the Internet. It needs to be known for something. Awareness and traffic on the web is cumulative, and all the time used to gain a visitor is wasted if the site is not worth bookmarking, sharing, remembering or revisiting. To achieve this, you must be prepared to invest in your site’s utility. You must have an offering to the public at large, without the visitor needing to be a customer. Your website needs to find its place on the Internet. It needs to be known for something.If you sell lawn fertilizer, offer a lawn care calendar for the visitor’s geographical area, e-mail alerts on care stages, free weekly lawn care tips and write a regular article. Create a place the visitor can count on, all the while promoting your brand and selling your product or service. Comparative shopping listings, mortgage amortization calculators, games, a “rare word of the day” and “your lawn care tip of the week” are all beginnings of utility for a website. If your competitors are already introducing utility in their online store fronts and developing a reputation for having a website that’s worth returning to, then you have something to worry about. Don’t wait until then. Up the ante and don’t waste another visit to your site.

Content

Many times the utility of a good website resides in the content it offers. Now this is where many websites have an identity problem. Most view their website’s static “brochure” text regarding their product or service as the website’s content. It isn’t. Content has purpose and application to the visitor beyond your primary offering. It may not apply to everyone, but it needs to be content that your audience wants to read, see, play, view, hear and interact with. Content has been and always will be king. As a result, the content maker is king. Believe it or not, writers are usually the single most important factor to the successful website core. If your website features piano playing tips in video form, then the video producer owns the role of king. Don’t regard your website as a one-time sales pitch. Invest in content and the long-term rewards will be exponential.

The idea

The challenge of utility and content represents the stage where the good idea is born. If your website doesn’t present any reason for a visitor to return, then it’s useless. Your website’s success is based on its core concept. What is it going to offer people? What is its reputation going to be? What about your content is going to make people talk about it, forward its web address, bookmark it, share it and most important, what is going to make people come back to it? This is where a good web development firm shines. The responsibility of your web development firm is to make sure the idea around your utility and content is sound and executable. Web professionals work hard to stay abreast of what the Internet landscape—and all competitors—provide. They know what people want, what’s lacking, where the opportunities are and where to drill for maximum gain.

Presentation

You’ve got your idea, you’ve found your niche, you’re creating great content––now we can talk about building a beautiful and functional website. Crafting a superstar website is its own discipline. Professionals that build memberable websites master a craft that is like no other. Once again, the Internet’s vast array of possibilities and potential are the reason so much more must be considered. Take, for example, reading a magazine. The magazine contains a catalog of content. It employs the simple interface of a table of contents, page numbers and the action of turning the pages—that’s it. In contrast, a website has multiple dimensions and depth. It does more than display your content—it’s functional. It stores content, catalogs it and queries it. It reacts. It allows for conversation and builds community. Your 24-hour Internet house is, in short, a working engine that must reflect your brand proudly, be functional and easy-to-use and run itself without you in the room. Your website is a working engine that must reflect your brand proudly, be functional and easy-to-use and run itself without you in the room. But with great power comes great responsibility—in design and function. It’s very much like building a unique, first-of-a-kind car from the ground up, combining art and precise engineering into a beautiful, functioning machine. There is a metric ton of considerations in any given website, right down to the psychology of choice. As a result, there are many amateur web designers, but very few great web builders. Still, many companies rely on traditional marketing agencies who see web development akin to the linear development of print material, television commercials or radio spots [see our article on the fall of traditional marketing companies]. In other cases, some companies employ a single individual––usually a programmer or a designer––to build a competitive website that in reality requires experts from many disciplines. Both of these extreme approaches to web building leave a trail of failed websites littered around the Internet landscape. The memorable and over-performing website requires a unique and specific combination of expertise from an array of web professionals, all working in concert on the details and all joined together on the big picture. That doesn’t mean you need teams of people working around the clock, but you will need portions of their knowledge and interactive specialties to craft it the right way the first time. In fact, the right way costs less upfront and makes your investment that much more powerful.

Traffic Building

You’ve established a good foundation with your web marketing strategy and metrics; you’ve got an online building that’s both beautiful and very useful; now the focus turns to building foot traffic. While the traffic building plan is part of the web marketing strategy, its execution is on an ongoing basis. The exact strategies and tactics for traffic building are different for each business, brand, product or service, and covering all the possibilities would be beyond the scope of this article. Effective traffic building, however, depends on one key element: the relation of a website’s utility and content to the community at large. Food for thought: In the beginning, you will start with any traffic. However, the public does reside with other websites. Those other websites have provided a platform for community. There are an endless number of online communities on everything from aardvarks to zucchini that people bookmark, remember and participate in––weekly, daily, hourly. You need to be there too. Identify those spots and begin participating in them. Be real and helpful. Promote your brand when appropriate, and promote your personality in the process. Link to some of your good content. Extend an offer outside your primary objective. Create and build a reputation. Again, there’s more to this than a simple example can convey. Simply put, there must be regular engagement with the public outside of your website. People engage with companies through the best form of advertising: word-of-mouth. The Internet just sets that on fire.

Visitor-to-Customer Conversion

The science and art of converting a visitor into a customer is unique to each web marketing plan. It begins with identifying, marking and sometimes even coding-in conversion points within the site. Conversion points can be the creation of an account, the point at which a product is sold, the submission of a contact form or the making of an appointment. The array of possible conversions are unique to the business; however, they tie directly to the bottom line. This is where the experienced web development agency brings metrics back into play. All efforts in traffic building and advertising are mapped; traffic from websites, search engines and other sources are cataloged; traffic is tracked to conversion points within the site; analysis is taken and actions to improve traffic and the rates of conversion are continuously implemented. Such complexity is beyond the expertise of traditional marketing firms or the one-man-band.

Getting Started - The Big Picture

Yes, at first glance this is a lot to take in. That’s why it’s important to interview your marketing firm to make sure they not only recognize the web marketing universe, but that can also execute on it and show results. We’re here to help. Call or write us. We promise to answer all of your questions in a straightforward manner and help you understand it all. If you’re already engaged or under contract with another firm, at least ask your firm—and yourself—the tough questions:

• What is the plan?
• Why will people come to your website?
• What will keep visitors coming back?
• What will make visitors tell others?
• What will convert visitors to customers?
• How is it performing?

And most of all: What will make people fans of your website? This is ultimately the goal of any web marketing campaign, and it's indicative of any superstar website. From local dentists to international corporate brands, anyone can reach the apex of online marketing, win more customers and gain market share for less money. Remember: fans do the marketing for you.

---

Mistrustcasting: A Tale of Two Brands

One day recently, a high school math class decided to conduct an experiment to ascertain whether Oreo’s Double Stuf cookies actually contain twice the “stuf” – crème filling – as implied by the treat’s name.

The class’s work yielded the faintly damning discovery that the Double Stuf contain only 1.86 more filling than the original incarnation – a shortage of 7 percent. Hardly headline-making news, right? After all, most folks would agree that it’s close enough and simply applaud the teacher’s creative, hand-on approach to this classroom exercise.

And that’s where Oreo should have left it, but they chose not to. Instead, when contacted about the matter by Business Insider, the company issued a formal statement claiming the math class had reached an inaccurate total and that their Double Stuf recipe does indeed include fully twice the amount of filling. So Business Insider put together its own experiment, which came down in favor of the math class.

Oreo’s response made this story bigger than it needed to be, and as a result, the brand’s overall reputation took a hit. After all, if they felt the need to lie about 7 percent of their filling, what else might they be hiding? The cookie controversy served up good fodder for a few days of news bites and morning drive-time humor, but given the public’s lasting love for Oreo, the Double Stuf kerfuffle blew over in short order.

More than filler

The Double Stuf debacle is an entertaining – if relatively innocuous – example of just how easily the integrity of even the most well-known brands can be called into question. That’s why the task of building and maintaining trust in your brand is such serious business. For more evidence, let’s take a closer look at BP and SC Johnson, two huge corporations with very different approaches to brand integrity – and very different reputations.

Both companies deal in products under close scrutiny in today’s increasingly green-minded business and marketing environments. BP is the world’s sixth largest petroleum fuel interest, and SC Johnson is one of the world’s largest producers of household cleaners.

If you look at their advertising and PR, both companies use strikingly similar language, which is logical, given that each company has a vested interest in portraying itself as environmentally responsible and forward-thinking.

But the court of public opinion tells a very different story, making it clear that their efforts to define themselves are yielding drastically different results.

BP’s big problem

More than three years after the disastrous oil spill in the Gulf of Mexico, BP is still dealing with the aftermath on many fronts. In addition to the illegal practices which led to the spill, the company has been found guilty of felony for lying in its response to the disaster and has paid out more than $42 billion in clean-up costs, settlements and fines.

BP was found to have engaged in multiple deceptions before, during and after the spill. The company repeatedly refused to disclose accurate or timely information for months after the disaster, which resulted in a far greater impact on the environment than would have happened if the company would have been immediately forthcoming.

A visit to BP’s website shows that the spill still dominates much of the company’s PR efforts. That’s as it should be.

But even as BP touts its gulf clean-up efforts in carefully crafted feature articles, it releases defensive statements whenever its efforts and motives are called into question. For example, in a statement dated August 28, BP responds to recent allegations by the state of Louisiana claiming that BP has not adequately addressed the clean up. Here’s the money quote that leads the statement: "Any suggestion that BP has failed to address the clean up of the Louisiana coastline is both false and irresponsible.”

No acknowledgement of BP’s responsibility, no conciliatory tone indicating that BP is committed to repairing the damage it caused, no apology for all of the suffering. Just a hardline defense, with copy that reads like it was drafted by a stereotypical Hollywood lawyer. This antagonistic tone is at odds with the shiny, happy stories that appear throughout the special section of its site dedicated to the Gulf of Mexico restoration.

This stark discrepancy between rosy PR fluff pieces and sharp legal statements defines the very heart of BP’s brand integrity issue. This is a company whose practices are squarely at odds with the public image it attempts to project.

Start with the logo

Petroleum is hardly a “clean” business; the best any oil company can offer is diligent safety practices and commitment to mitigating its environmental impact.

When BP debuted its green sun logo in 2001, the flowery “helios” mark, it was a clear effort to position the brand as somehow “cleaner” and more environmentally conscious than its competitors. The green sun implies a very different focus than, say, an oil derrick looming over a seascape. Yet in the decade plus since its logo shift, BP has actually decreased its efforts in the arena of solar power, finally announcing plans to shutter them altogether in 2011.

The fact remains that BP is first and foremost an oil concern, with all the environmental risks that such companies encounter. Until BP’s research spending on alternative fuels exceeds the 50 percent mark, that logo is a blatant lie.

Follow the money

Many brands seeking to build trust with the public establish charitable foundations or make contributions to causes. With its image in desperate need of a reboot, BP has made significant donations to gulf cleanup efforts and regional charities that focus on hunger and housing. These are all high-profile, press-release-ready efforts.

It’s certainly better than nothing, and BP does seem to grasp the idea that it needs to spend big to show its concern.

But you won’t find much in the way of marine environmental research on BP’s books or any slowdown whatsoever in the company’s high-risk deepwater drilling projects. No, right along with its more environmentally friendly efforts like wind and biofuels, BP is still using the lion’s share of its research dollars to pursue the same kind of risky drilling that damaged the Gulf of Mexico so dramatically.

As John Bell writes in Forbes Magazine, “BP’s talk about caring for the environment was for naught, as its actions failed to match its message.” Small wonder that a site like boycottbp.com is still growing strong. Or that the brand ranked at number seven in MarketWatch’s 2013 poll of companies with the worst reputations.

SC Johnson’s evolving transparency

While SC Johnson certainly faces environmental concerns, it does have an inherent advantage over a company like BP. After all, a Gulf-scale tragedy is highly unlikely in the arena of household cleaners.

But this field carries its own set of risks. Many of SC Johnson’s products – insect repellents, cleaners and baby shampoo, to name a few – are used by families on a daily basis. And in the last decade, concerns have increased about how these types of products impact not only the health of customers but the greater environment as a whole.

In large part, SC Johnson has responded to such concerns with a careful trust-building approach that includes admission of mistakes and a proactive willingness to change corporate policy and behavior. While there have been a few bumps in the road, even their response to setbacks has been characterized by a tone that emphasizes responsibility over defensiveness.

Open policies

One major area of concern with consumers about household products is the ingredients. Many cleaners and air fresheners tout a natural, organic identity while their labels contain a long list of unpronounceable components unfamiliar to anyone lacking a degree in chemical engineering. In an effort to counteract this, SC Johnson launched its "What’s Inside SC Johnson" website in early 2009, where it has published complete ingredients lists for almost all of its products.

However, the company’s track record is not perfect. Its “Greenlist” label, featured on Windex and other products SC Johnson claimed passed its highest environmental standards, was the subject of several consumer-advocate lawsuits. Because the label closely resembled other third-party designations for independently vetted products, the suits rightly called into question the legitimacy of SC Johnson practice of promoting its own – potentially misleading – self-proclaimed green standard.

Response to criticism

One of the ways in which SC Johnson has been most successful in upholding the integrity of its brand is in its response to controversy. The company trades heavily on its identity as a family-owned business, something that can be difficult to buy given its global scope and multi-billion-dollar annual sales numbers. But when issues arise, it is not a corporate lawyer that does the talking for SC Johnson; it’s Fisk Johnson, CEO and true blood family representative.

In the case of the Greenlist issue, Johnson reiterated the company’s commitment to the environment, but admitted its misstep. “When you're out in front of an issue like this, it means that you're not always going to get it completely right, as was the case with this particular issue," he said.

SC Johnson has also demonstrated a willingness to change its formulas and policies ahead of any legal mandate – and also ahead of many competitors. The company has reduced its greenhouse gas (GHG) emissions by 42 percent since 2000, and it has installed two wind turbines at its largest global manufacturing facility, enabling that facility to produce most of its electrical energy onsite.

Integrity gets results

All of this earnest effort is certainly paying off for SC Johnson. In 2012, the United Nations Foundation for Social Change honored the company as a global Leader of Change, and in 2013, the company received an EPA Climate Leadership Award for Aggressive Goal Setting.

SC Johnson’s mix of staying true to its family roots, increasing transparency with customers and demonstrating a willingness to change combines to reinforce its reputation as a brand that operates with integrity. While the company isn’t perfect, its actions maintain consistency with its image. By any measure of consumer confidence, that’s a powerful – and to borrow from BP’s ill-used lexicon – sustainable strategy.

---