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.

How to Fail in Business Without Really Trying

Business: A Loser’s Manual

In a tough economy, there are any number of ways that you can ruin your reputation and sink your company. But why settle for only one? If you’re ready to fast-track your path to obsolescence, here’s a step-by-step guide to ensuring that your business goes down in a truly spectacular blaze of glory.

1. Ignore your customers.

Customers? Who needs ‘em! They’re loud, they’re demanding and they’re constantly contradicting themselves.

Rather than molding your business and its offerings to suit them, charge forth with your plans and your strategies like a bull in a china shop. After all, it’s your company, and nobody knows better than you what your customers should want, need and be forced to accept.

Besides, customers are a dime a dozen. If the current crop doesn’t appreciate you like they should, just tell them to take a hike. Won’t they be sorry when they realize what they’re missing?

2. Resist change at all costs.

Let’s face it: change sucks.

It’s uncomfortable, difficult and just downright annoying. It’s like someone dragging you out of your favorite recliner and forcing you to go for a run. I mean, sure, running would improve your health, but why bother, when you were perfectly content to stay glued to your chair. Stagnation is bliss, right?

It’s the same in business. No one likes branching out from what has been proven to work to try new ideas. Innovation requires risk. There’s safety in the status quo.

What’s that famous line about “If you don’t like change, you’re going to like irrelevance a lot less”? Bah. That guy was only Chief of Staff of the United States Army. What does he know about change or the risks that come with it?

3. Chase shiny objects.

Ooh ooh – have you heard? There’s a great new social media network that just launched that’s kinda like Facebook plus Pinterest with a little bit of MySpace thrown in the mix, but it’s only for people who are left-handed. You have to sign up RIGHT NOW! If you don’t everyone else will be there, and your competitors will steal all your customers.

And did you hear about that new app that will do that one specific thing that you never thought you needed until you found out about it? It’s like an answer to a question that doesn’t even need to be asked! It’s amazing!

No need to worry about running your company. It’s practically on auto-pilot. Playing with gadgets and dabbling in social media are way more fun!

4. Refuse to innovate.

You could pursue a new vision or chart a course to lead your company to something bigger and better, but why bother? Surely everything that’s always worked in the past will continue to work in the future. That’s why Circuit City is still going strong after all these years, right? Guys?

5. Don’t listen. To anyone. Ever.

The whole reason to start your own company is so that no one can tell you what to do.

Warning signs? Ignore them! Words of wisdom from more experienced colleagues and peers? They’re not the boss of you!

Just do your thing. Run your company however you want, and don’t pay attention to the handwriting on the wall or the advice of those who’ve been there before. They’re just trying to bum you out and bring you down with their “knowledge” and “insight.”

Back to reality.

On a more serious note, this is clearly a satirical look at why some companies go under while others sail through adversity relatively unscathed.

And while these scenarios are humorous when painted in such extremes, in reality, the underlying tendencies and traits they represent are all too human. At times, we can all be susceptible to such faulty ways of thinking. We all have our moments of arrogance or capriciousness or stubbornness or fear of change. They key is to recognize these dangerous impulses so we can actively combat them and maintain a steady course toward growth and greater success.

Remember: no one is immune, so be alert. Keep an close watch on your own thought processes and focus on creating a culture within your company that fosters self-analysis, creativity and courage.