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.

---

Is Your Brand Ready to #OptOutside? How to Follow REI’s Bold Leap into Customer-Centric Marketing

For many retailers, the day known as Black Friday has become one of the most important dates on their calendar. Last year, shoppers in the US spent just over $9 billion on the day after Thanksgiving, counting for a sizable percentage of many stores’ holiday sales. This is why it was so surprising when outdoor equipment retailer, REI, announced that they would be closing all 143 of their stores this Black Friday and encouraging their employees and customers to #OptOutside instead. It remains to be seen if this bold move on the part of REI will make a dent in the company’s sales over the entire holiday period or if they will make up the difference elsewhere. What we do already know is that the early reactions to this decision have been extremely positive and there are some valuable lessons to be learned from this campaign from REI.

Customer-centric marketing is still marketing.

Make no mistake about it, this decision by REI is marketing. They have an entire section of their website dedicated to this #OptOutside idea and they are encouraging others to join them and to “tell the world.” A company does not take these steps for a simple announcement of a change in store hours. You go to these lengths for a marketing campaign. The fact that this is a marketing campaign should in no way take away from what REI is doing with this idea. They are voluntarily skipping out on one of the biggest shopping days of the year in order to do something that will benefit their people. Not only are they losing out on the sales from that day, but they are paying their employees to head outside! So this day is costing the company in a number of ways. Yes, this is marketing, but that does not also mean it is not an amazing and honest decision by this company. Marketing does not need to be a shady or deceptive thing, it simply needs to shine a light on your company. If you can do that while also doing something positive, that is a win-win situation.

Stay true to your ideals.

The main reason why this campaign from REI is so perfect is because it is absolutely in line with the company’s overall ideals. This idea makes sense coming from REI in a way that it would not if it was being done by Wal-Mart. That is not a knock on Wal-Mart, it is just the simple truth that this kind of a campaign would not be on brand for that retailer, while it is for REI. When planning your own campaigns, remember to remain true to your company’s ideals and mission. No one likes marketing that feels disingenuous, so by being true to who you are, your efforts have a much better chance of being well received.

Make the hard decisions.

On-brand or not, this decision could not have been an easy one for REI to make. There is no way to deny the fact that they will lose sales by closing the store on Black Friday. Still, they made the hard choice to follow through with this initiative anyway. That is an important lesson. Doing something new and unexpected is rarely easy. Sometimes it can be really, really hard. If you have thought through your plan and decided that it is the right direction for your company, you will need to make that hard decision and press forward. Depending on the structure of your company, making hard choices may require buy in from multiple people. Have these discussions and evaluate all the angles, but in the end, do not allow a hard decision to prevent you from making the right decision.

Do the opposite of your competition.

REI’s decision to shut their doors on Black Friday is so surprising because it is the exact opposite of what other stores are doing. Other companies are expanding their hours of operation, with many of them opening on Thanksgiving to get a jump on the shopping frenzy. A company that stands up and decides to take the exact opposite approach of what everyone else is doing gets noticed. When planning your own marketing or promotional ideas, look to what your competitors are doing and think about how you could turn the entire situation on its head. Dare to be wildly different and take the opportunity to show the world how you are different from your competition and why that should matter to them. Taking a unique approach can be incredibly powerful, especially in the world of the Web where everyone seems to be playing a game of “monkey see, monkey do” and just rehashing the same old campaigns and approaches over and over. If you want to break that mold, you can start by moving in the opposite direction of everyone else.

Tell the world.

The best marketing idea in the world will fail if you do not share that idea with the world. You need to promote your campaign so it reaches your customers and potential customers. In the case of REI, they didn’t just put a small sign on the doors of their stores to let customers know about their Black Friday plans. They shot videos, made a website, and created a whole campaign around their #OptOutside hash tag. When planning your marketing campaigns, be sure that you couple a great idea with a strategy to communicate it effectively. REI has done this perfectly and the incredibly positive reception they have received from people fed up with the ridiculousness of Black Friday has helped propel this campaign even further. All the while, people are talking about REI in a powerful and positive light. Yes the company may lose some sales on Black Friday, but what they are gaining in terms of public perception and promotion is priceless!

Have a plan.

In addition to communicating what you are doing with the world, you should also have a plan to capitalize on the results. REI is not stupid, they know that the business will still come and I fully expect them to run sales the rest of that Black Friday weekend. People who appreciate what the company has done for their employees and customers may make it a point to shop with them that weekend as a show of support. In the end, the company may even make up those lost Black Friday sales that weekend or over the course of the holidays. This has to be part of their ultimate plan – to do something positive and different while also positioning it in such a way that they will be able to recover anything that may have been lost. It’s a great plan for all involved.

In summary

REI took a bold stand in their efforts to break away from what every other retailer is doing with their Black Friday promotions. Instead of fighting for attention on that crazy shopping day, they have decided to take a different route. Because they stayed true to their ideals, made some tough decisions, and were unafraid to shake things up and be different, they are the store that people are talking about leading up to Black Friday, which is interesting since they are the only ones who will be closed that day.

---