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 New Rules of Customer Engagement

The rise of the culture of the Web has revolutionized the nature of how businesses and customers relate to each other. Whereas companies could once shape and direct the perception of their brand through carefully crafted ad campaigns, direct mail and press releases, today the flow of information runs fast and free, and customers now own the conversation. And because whoever owns the platform dictates the culture, the world is a more human, less institutional place to do business. Today’s customers want to feel good about the products they buy, where they came from and how they were made. Moreover, they want to like the company behind the product – that is, genuinely like it, not just press a Facebook button. We are entering an age of emotive economics. Corporations have been forced to adapt to this new, people-centric culture by connecting with customers on their own turf in more casual, conversational ways. There’s little room or respect for old-school corporatism’s pomp and protocol. And those businesses that cling to traditional behaviors in the online community will earn its scorn very quickly. Those companies that have embraced this new landscape and its risks have enjoyed great reward. For this reason, the human face, rather than steal and glass, has become the façade of big business. Yet with style must also come substance. It is no longer acceptable to be about profit alone. Companies are expected to contribute to the world in ways that make their customers’ lives better. Consumers are demanding that business be done on their terms. It should come as no surprise, then, that human values – transparency, respect, conscientiousness, kindness, trust, generosity and the like – are the keys to engaging with customers in this brave new world of business. So how can you use this new dynamic to your advantage to grow your business? You must embrace the new rules of engagement, understanding that when you put people first, profit will follow:

1. Don’t treat customers like they’re stupid.

When Netflix bungled its attempt to change its pricing structure last year, the backlash in the online community was severe, with many customers threatening to cancel their accounts immediately. It was clear that customers viewed Netflix as a value-priced alternative to more expensive traditional paid media channels, and therefore many felt betrayed by the company’s sudden doubling of their fees. While the price increase itself wasn’t really so unjustifiable, what made it unpalatable for customers was the company’s lack of transparency in explaining the business drivers behind the rate hike – the rising operational costs of maintaining a physical DVD business and the growing licensing fees for content streaming. Instead, Netflix spun the move as giving customers a “choice,” offering the option to subscribe to a DVD-only service at its lowest price ever. Here's an excerpt from their ill-advised news release: To his credit, CEO Reed Hastings acknowledged the poor handling and chalked up the misstep to “overconfidence,” which still sounds like PR spin, but hey, we’re making progress. The lesson? If a change in product or policy may have negative consequences for your customers – even if only in perception – acknowledge them, express empathy over the inconvenience or added cost, explain the reasons if possible and then point out the benefits or offer alternative options. People understand that businesses must evolve and that profit is still part of the equation. Don’t assume that your customers are beyond reason or treat them like they’re too stupid to detect what’s really going on.

2. Over-serve your customers.

It’s always good business to go the extra mile for customers, but never more so than when trying to recover from a mistake. How you handle disappointment is what determines whether your customers write you off and tell everyone about it or trust you more and spread the good word about you. When Google decided to phase out Wave due to poor user adoption rates, they didn’t just shutter the windows and bury the technology as if it never existed. Instead, they gave users months to move their data off the service, converted Wave into an open-source project and gave the Wave community the tools to get involved:

3. Be humble and listen to your customers.

Building on the success of its breakthrough app Wunderlist, Berlin-based software firm 6Wunderkinder recently launched Wunderkit, a project collaboration and management tool designed around the social connections of today’s work environment. Wunderkit was made available in a “freemium” model, offering standard features to all users for free with additional functionality available for a small fee to power users. As the company analyzed feedback from its beta release of Wunderkit, they realized the community’s dissatisfaction with project collaboration between users – one of the platform’s central features – only being available to premium users. What follows is a fantastic example of how to demonstrate that you’ve heard your customers loud and clear, understand their feelings and are acting to resolve the issue:

The customer is king, and the king is here to stay.

Never underestimate the commitment required to engage with customers effectively in today’s marketplace. Human relationships are not managed well with rigid rules and policies but instead must be governed by human values like compromise, sensitivity and transparency. It takes much more than a Twitter account and Facebook page to win the hearts of customers. You must develop a culture that is focused on and driven by the customer through and through. Be purposeful in growing such a culture. Establish your own rules of engagement. Make sure every employee is encouraged to embrace and exhibit those values. Empower them to do whatever it takes to take care of your customers. The journey may be a bit rocky at times, but if you walk the line faithfully, you’ll earn something from your customers that can never bought with advertising dollars – trust, respect and even passion for your brand and what it stands for.

---

Four Ways to Delight – Not Annoy – Visitors With the Element of Surprise

During its most recent keynote event, Apple announced that it had a surprise in store for their customers: every iTunes accountholder in 119 countries would receive a free copy of U2’s latest album “Songs of Innocence.” This giveaway translated into over half a billion albums given away, representing the largest release in history in a deal that is speculated to have cost Apple $100 million dollars. It would be easy to assume that Apple’s customers would be thrilled by this generous gesture. While many certainly were, there was also a very vocal segment who were not so pleased to see this album suddenly appear in their music collection. Many of these naysayers took to social media to express their concerns, which were centered not as much on the album itself but rather on the way that its delivery had been handled. While Apple undoubtedly thought that they were providing a convenience by automatically pushing the album out to all iTunes accounts, in doing so, they took away the customer’s ability to choose whether or not they wanted to receive this gift. What was meant to be a nice surprise came across as an act of overstepping the bounds of privacy for some customers – definitely not what Apple was hoping for when they conceived this promotion. Employing the element of surprise in marketing and in web design is tricky business. When done right, it can delight your customers, but if handled incorrectly – as with the Apple giveaway – it has the potential to frustrate and alienate them instead. Let’s take a look at four ways to use the unexpected to make a favorable impression on your website visitors and leave them wanting more – and the pitfalls to avoid along the way.

Surprise! Here’s a free gift!

Freebies have long been a staple of marketing and promotion. From product sampling to contests to incentives for joining a mailing list or sharing contact information, they are an effective way to break the ice when building relationships with new customers. There’s nothing wrong with a good giveaway – as long as you obey the fundamental rule of trustcasting, recognizing that all promotional efforts must be founded first and foremost in building trust with your customers and website visitors. As we touched on above, the problem with Apple’s U2 album promotion had nothing to do with the giveaway itself but rather with its delivery. Permission is a key element of trust-based marketing, and Apple’s circumvention of the act of permission seeking was perceived as a violation of trust by some iTunes customers. A direct contrast to this is MailChimp’s free t-shirt promotion. When a new customer opens a paid account and sends their first email campaign, they receive a message of congratulations along with the offer of a free t-shirt. In order to receive the t-shirt, however, the customer must select the size they would like, thereby accepting the offer; the shirt doesn’t simply turn up unexpectedly in their mailbox. Of course, we have no way of knowing how many people actually decline this free gift, but regardless of whether it’s zero percent or fifty, the most important aspect is the respect for the customer demonstrated by the act of seeking permission. MailChimp allows the customer to maintain a sense of control over the transaction rather than removing that control the way that Apple did. As this comparison shows, permission is a make-or-break element between a surprise that delights and one that compromises trust and goodwill.

Surprise! You’ve got mail!

Email is definitely an area of online marketing that’s fraught with pitfalls. You can be a welcome presence in your customers’ inboxes, or you can be a nuisance that’s banished to the junk mail heap. One way to practically guarantee that you’ll end up in the latter category is by “surprising” your customers with a flood of emails that they did not expect to receive. Undoubtedly, you’ve experienced this scenario at some point: you make a purchase from a website or register for an account, and all of a sudden your inbox is overrun with promotional emails from that company trying to get you to come back to their site and buy, buy, buy. Make no mistake: the simple act of placing an order is not an invitation to unleash a deluge of spammy messages. Again, returning to the theme of permission, the first step to ensuring that your emails are welcome is by allowing your customers to explicitly request to receive them. A common way to accomplish this is by including a mailing list opt-in on your site’s checkout form accompanied by a message affirming that the customer wishes to receive updates with special offers and future promotions. In and of itself, this is a fine practice. If someone wants this information, allow them to receive it! The problem is that many companies have this option selected by default, and as a result, in their rush to complete their transaction, many customers will overlook this feature entirely and will unwittingly opt in to the series of emails that will follow. Again, this is an unpleasant surprise that does not contribute to improving the customer’s perception of your brand. If you are going to employ a mailing list opt-in checkbox anywhere on your site, make sure that it’s unchecked by default and that customers must actually see, read and make a conscious effort to elect to receive ongoing communication from you. Your mailing list won’t grow as quickly this way, but you will avoid surprising unwitting subscribers with emails that they did not expect or want. But obtaining permission to send these emails is only half the story. You also need to make sure that the content of your messages is designed to delight. Anything that is purely self-promotional in nature will be regarded as nothing more than an annoyance. You must use your carefully garnered inbox privileges to provide value to your customers – whether that comes in the form of special offers, fun promotions, reminders about upcoming events or just plain useful information. Your focus should be on crafting email campaigns that leave your customers looking forward to seeing what you’ll send next – not hitting the “spam” button as soon as it lands.

Surprise! Let’s watch a video!

Video content is a great way to engage with visitors to your website. As much as we writer types are loathe to admit it, people don’t like to read. They like to look at pretty pictures, and even more, they like to be entertained by videos. If you can create compelling videos – whether they demonstrate your products, offer helpful tips or are just flat-out amusing – your visitors will be delighted that you’ve gone the extra mile to give them the kind of content that they prefer rather than forcing them to wade through page after page of written text, and you’ll be head and shoulders above your competition. But there’s one important caveat to video content: never, ever, ever set your videos to auto-play on your site. Uncued audio, video, animations and pop-ups are completely taboo in modern website design, and if you use them, you’ll provide an unpleasant surprise that sends visitors scrambling for the back button to get away from this sensory onslaught. Don’t insult the intelligence of your visitors by forcing content upon them. It’s the online equivalent of having a pushy salesman pounce on them the minute they walk in the door and hound them into looking at products or services that may not be relevant to their interests at all. Instead, provide contextual clues on the page that indicate what your video is about, and allow your visitors to decide for themselves whether or not they wish to view it. This removes the element of unwelcome surprise without eliminating the value of the video content itself.

Surprise! We’ve made changes to our website!

Inevitably, there will come a time when it’s necessary to make changes to your website. These changes could be as minor as adding new types of products or services or as significant as a complete redesign. The problem comes when regular visitors return to your site expecting one thing (the site that they have become familiar and comfortable with) but receive something else instead (the new site). Of course, it goes without saying that any changes you make to your site should be driven by the objective of creating a better experience for your users. Make sure you carry this objective through to the launch of your new site or its new features by smoothing the transition for your regular visitors. After all, every website comes with an inherent learning curve. If you’ve done your job right, that learning curve should not be very steep; yet, it will still exist as visitors determine where they need to go and what they need to do to accomplish their goals. Therefore, when you make a change, you can ensure that it’s well received by visitors simply by alerting them to these changes and guiding them through the process of navigating them. One example of how to execute a re-launch right is Citizens Bank. Weeks before the release of their new site, they posted a message on their existing home page announcing that changes were ahead and signaling the date when the newly overhauled site would launch. They also offered a preview of the new site complete with an overview of new features and instructions for where to find commonly used tools. Did every customer see this message and take the tour? Of course not, but many did, and as a result, they were not taken aback by a jarring surprise on the day of the new site’s launch. Instead, they were already acclimated to the new features and functions, thereby maintaining a sense of certainty and control throughout the transition process. By demonstrating to their customers that their needs and desires were an important consideration in the bank’s plans for their new site, Citizens Bank was able to create a positive experience out of their redesign and avoid the potentially hazardous pitfall of forcing their customers to stumble unassisted through the process of re-learning how to use their site.

In summary

Going above and beyond to provide customers with unexpected value can be a powerful way to separate yourself from the competition, but if done incorrectly, it can also backfire in a big way. In the case of Apple, the company had to release a tool to allow customers to remove the free U2 album that they had been gifted – something they clearly did not foresee as necessary when they conceived the promotion. When you are considering how to implement the element of surprise in your marketing and website design plans, remember never to lose sight of your customers and their needs. Always ask their permission, keep the power in their hands and allow them to remain in control of the process as much as possible so that your surprise will be welcomed with delight and satisfaction.

---