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.

Mastering Tribe Marketing

Introduction

In part one of this series, Tribes in Today's Marketing, we established a foundational understanding of what tribes are, how and why they form, how they've evolved and how this has redefined the marketplace.

Now we turn our attention to how business growth is achieved today by identifying, understanding, joining and, in due time, leading the tribes that are relevant to your business and your bottom line.

Identify your tribe

When you are marketing your product or service, you strive to understand your target audience. Certainly you can map out the usual demographic variables – age, gender, income and location. These are easy to understand, but to participate and ascend to leadership in your tribe, you need more.

Chances are, your tribe doesn't exist around your direct offering in and of itself – either specifically around your brand or even your product or service in the generic sense.

More than likely, your tribe will coalesce around an idea or value that surrounds your product – whether it's the convenience it provides or the aspect of a lifestyle that it affords.

If you sell golf clubs, the task of identifying your tribe is fairly straightforward. Your tribe is passionate about golf, about improving their game and about having the latest in golfing technology.

Perhaps you're an organic grocer. Your tribe is comprised of people who are conscientious about good health and nutrition and about supporting farmers who grow more natural, healthful foods. These are the people that are ready to take your message and set it on fire.

However, many times the tribes that drive organizations and their products operate at a different level.

If you own the corner coffee shop, you most certainly have something to offer the tribe of people who appreciate good coffee. But perhaps the atmosphere of your shop taps into the passions of a tribe that aspires to lead a cosmopolitan lifestyle. If you sell fair trade coffee, your products might appeal to an entirely different tribe – one that is sensitive to geopolitical issues.

Many times, tribes are about a state of mind. They are comprised of people who live a certain way and who care about certain things. In this way, the challenge is not so much about analyzing demographics but identifying those whose shared passions align with yours.

Locate your tribe

Tribes are never static. They exist with purpose. They are living life and solving problems. In order to continue being relevant to and meeting the needs of their members, they must evolve. This requires a platform – if not multiple platforms – where they can meet, discuss and debate ideas, share news and continue the ongoing conversation around their passions.

They're on message boards; they're talking in forums; they're in the blogosphere; they're connecting with each other on Twitter. In some cases, they're even gathering and meeting in person.

Most of the time the communities that you are looking for are not centered in one place, and there's rarely an obvious sign that reads, “This community lives here.” If you sell coffee, you can't just go to coffeeisgreat.com and find people who are talking about how much they love coffee. However, if you've identified your tribe as well as their passions, needs, wants and fears, it's a lot easier to find them.

Interest-based tribes vs. relationship-based tribes

So far our focus has been primarily on interest-based tribes, which form when people connect around a shared passion. However, social media allows for a new type of connection and thus a new type of tribe – one that forms based on how its members know each other, whether through work, family or location.

These organically created tribes are not bound by any one common interest but rather by the shared goals and interests of life that are relevant to us all. We turn to these tribes for help getting things done, for solutions to everyday problems and for guidance to improve the quality of our lives and the lives of those around us.

Relationship-based tribes and local business

The power of these types of tribes is fairly significant when you consider the nearly limitless aspects of life that we all have in common. Most of us get haircuts, wear shoes, do laundry, watch TV, pay utility bills, buy groceries, own cars, improve our homes, raise children – the list goes on almost indefinitely.

For all of these things, we rely on our tribes of family, co-workers and neighbors for helpful advice and recommendations. As a result, small businesses have a tremendous opportunity to thrive within these tribes if they know where and how to find them. The answer is social media.

For example, if someone has a wonderful experience with a local mechanic, they don't log in to greatmechanics.com and evangelize for Mike the Mechanic. They do, however, tweet about the great service they received. They might even take this one step further and make Mike a member of their online community by connecting themselves with his business page on Facebook and sharing his website with friends living nearby.

In fact, it is not uncommon for the genesis of an interest-based tribe to start with relationship-based tribes talking about a brand and sharing its message.

In other words, if you connect with members of 50 family-based tribes, inevitably these people will connect to form their own community, and your message will begin to spread virally, feeding off of its own momentum to foster the growth of an interest-based tribe.

Become a member of the tribe

Membership doesn't begin the day you start participating in the conversation. You must earn the respect of the tribe in order to become one of them.

Don't come in and immediately start selling, or you'll be ousted swiftly and permanently. Better yet, don't even start by speaking. Listen first and gain insight into the culture within.

Most tribes have evolved over many years and have developed their own rules, perspectives and goals, and building credibility requires an appreciation of these nuances. Read through past conversations to understand the history and the passion surrounding the issues. Learn what's funny, what's serious, what's cliché, what's typical, what people want and what turns them off.

When you do start participating, the one and only rule that applies is to be real. Don't approach the conversation as a self-motivated, faceless corporate salesperson. Come to serve the tribe and its goals. Be yourself – a person with a budget, family, needs, problems and passions just like everyone else.

If you are in the business of doing what you love and you believe in what you do, then talk about it honestly when the time is right without bias or agenda. You must become a trusted member of the tribe before you can begin leading it.

Rule the tribe

The process and path to tribe leadership is unique for each community. However, all tribe leaders posses certain qualities that allow them to ascend to the top.

They are fearless. They are innovators. They challenge the status quo. But, above all, they have built a consistent reputation on standing for the tribe.

As time goes on, after you have proven that you are driven first and foremost by the advancement of the tribe, you'll gain footing as more than just another trusted, non-biased member. The tribe wants to know that you're listening and leading. They want to know that someone is there who genuinely cares about meeting their needs. If you can earn that level of trust with them, they will not only buy from you every time, they will spread your message like no marketing campaign ever could.

This is where tribe leadership truly runs contrary to business models rooted in decades of traditional marketing.

Today, it is more important to be trusted than to sell. Tribes are founded on trust, and trust cannot be achieved with the tactics of old marketing. It is true that tribe leadership and direct selling can both generate sales revenue – at least in the short term. However, while gaining the trust of your tribe is the more indirect path, in the end, the organization that makes a long-term investment in tribe leadership will ultimately achieve the greatest number of sales and claim ownership of the market.

In part three of this series, we'll cover how the influence of tribes extends beyond promotion and actually shapes how business itself evolves around the tribe.

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.