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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Fame Foundry Sound Off: AT&T's Seth the Blogger Guy

As the exclusive carrier for the iPhone in the U.S., AT&T has found itself in the midst of a PR nightmare of its own making. Most customers have a love/hate relationship with the company, and even worse for AT&T, these customers are very vocal about their issues. As fervently as they sing the praises of their iPhones, they also profess their contempt for the network's unreliable service and vent their resentment of the carrier's stranglehold on the device. In an attempt to tip the scales of public opinion back in favor of love, AT&T has once again rolled out “Seth the Blogger Guy,” who made his debut on the company's YouTube channel earlier this year to hype the launch of the iPhone 3GS: In response, Fame Foundry's agents address AT&T, Seth and yet another misguided effort by a faceless corporation to work magic through social media.

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• The Architect

  I have no idea who "Seth the Blogger Guy" is. He's obviously not a "blogger guy"; he's an AT&T spokesman. It immediately comes off as insulting that AT&T would assume I would know this guy and buy what he says from that point on because he's "just one of us." 

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• The Craftsman

  Why is a "blogger guy" delivering this message? He does not come across as an AT&T authority that can in any way influence the reliability of their network. It's almost as if they found a guy in a cubicle and asked him to be in a video. I also don't appreciate the Schoolhouse Rock approach to explaining what happens when a call is made. First of all, don't insult my intelligence. Secondly, I don't really care. I just want it to work.

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• The Developer

  This just goes to show that not only does AT&T not understand the people they are talking to, neither does the ad agency that made this lame video. It is a blatant PR attempt to position themselves as a leader instead of being honest and apologizing. Today's consumers want honesty, and obviously neither AT&T or the company that produced this video understands this simple fact. Suck it up, AT&T, and give us a sincere apology and a credit for the crappy service so we know you're serious.

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• The Engineer

  Where was the investment before now? Before the iPhone there were smartphones, and we were yelling then, too. You didn't hear us five years ago and get "on it." You're apologizing for your lack of investment in infrastructure with the money you got from charging people an arm and a leg to send cheap text messages. People don't forget, AT&T. Heaven help you when another carrier gets its hands on the iPhone.

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• The Author

  Even if we were to accept "Seth the Blogger Guy" as a credible voice of authority (note to AT&T: we don't), the video is still highly flawed. I will give AT&T credit for recognizing the conversation happening around them in the social media sphere and attempting to address customer concerns through the channels where they are talking. However, that's where their smart new-media thinking ends and they fall back on comfortable and familiar old marketing conventions. Rather than taking advantage of the opportunities offered by social media networks to engage in candid and genuine dialog, they simply broadcast a message that is obviously 100 percent scripted and delivered by a spokesperson with no real personality. There is no sense that this represents a heartfelt communication from a company that values its relationships with its customers. Instead, the tone of the video ranges from condescending ("Frankly, that's a very time-consuming process.") to patronizing ("The airwaves are kind of like a highway.") to exasperated ("We've heard you. We're on it."). As we've said before and will say again many times, people follow people, not companies. Until AT&T is willing to invest the time and resources necessary to cultivate real, meaningful and ongoing relationships with the public, their social media efforts will continue to falter, and they will be haunted by their reputation as the subpar network that's holding the iPhone hostage.

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• The Communicator

  AT&T's video violates one of the cardinal rules of social media: transparency. A simple Google search reveals that "Seth the Blogger Guy with AT&T" (as he identifies himself in the video) is neither an average joe blogger or a rank-and-file AT&T employee as his name, appearance and demeanor are all deliberately calibrated to portray. He is, in fact, not a blogger at all. He is Seth Bloom, senior vice president at Fleishman-Hillard, AT&T's PR agency. As soon as this is revealed, all credibility is lost, and the video comes across as nothing but an empty, manipulative and self-serving PR tactic. If AT&T truly cared about repairing its reputation and earning the loyalty of its customers, it would not hide behind a fictional persona but rather would put a legitimate company heavyweight on the front lines of its social media efforts. Instead, despite the controversy sparked by their questionable choice of spokesperson, the company has said that it plans to continue using Seth in future online videos.

A final word of advice for AT&T: There is no division between the "real world" and the world of social media. These days they are one in the same. You do yourselves no favors by posting what you believe to be a positive, reassuring, "we're in this together" video on YouTube and then telling every media outlet that will listen that your customers and their bandwidth-hogging iPhones are the problem. If you want to use social media to your advantage, you must be willing to represent your company in a truly personal manner - flaws and all - in order to earn and keep your customers' trust. Consumers are much more forgiving of companies with whom they have built relationships on a foundation of trust; they have little sympathy for faceless corporations. Or, in this case, a faceless corporation masquerading as a "blogger guy."

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