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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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.

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How to Pick a Fruitful Marketing Strategy: Three Juicy Takeaways from Walmart’s “Picked by Farmers" Campaign

Recently, Walmart has launched a series of video spots they call “Picked by Farmers, Guaranteed by Us,” featuring the farmers who grow and supply their produce. Each of these vignettes focuses on one individual farmer and one specific variety of fruit or vegetable. Additionally, each spot is centered around one of three themes: the personal story of the farmer and his experience working with Walmart (“Growers’ Stories”), helpful tips for how to select, store and prepare a particular type of produce (“Tips from the Farm”) or Walmart’s money-back guarantee. At first glance, these spots seem rather simplistic. There’s no trendy music, no rail-thin models indulging in the products, no Hollywood-worthy camera tricks or special effects. After all, we’re not selling iPads or BMWs here. But delve below the surface, and you’ll discover true marketing genius at work. Let’s look at the three core principles that make this campaign powerfully effective and how you can apply the same concepts to your own marketing strategy:

1. Serve before you sell.

Of course, these spots are designed to sell produce. As Walmart continues to take a bigger bite out of the grocery market with the aggressive expansion of its “Neighborhood Market” and “Walmart Express” concept stores throughout the country, they need to make sure that consumers think of them as their go-to destination not only for tires and diapers but also for tomatoes and dairy products. However, in the “Tips from the Farm” series, Walmart eschews using an overt sales message in favor of providing valuable, relevant information to their customers to help them make better buying decisions. For shoppers, there’s nothing more frustrating than spending their hard-earned dollars on fresh fruits and vegetables only to get home and find that their watermelon has no taste or their tomatoes have a mushy texture. With this understanding in mind, Walmart offers helpful tips on how to select, store and use these items to help their customers make the most of their grocery budgets (Don’t wash your strawberries until you’re ready to use them! Don’t put your tomatoes in the refrigerator! Pick an avocado with a firmness similar to the palm of your hand!). And who better to give this advice than the farmers who have dedicated their lives to understanding everything there is to know about these crops? To apply this principle to your own marketing strategy, think about your area of expertise and how you can put your inside knowledge to work to help your customers. For example, let’s say you own a home renovation business. Any homeowner who has undertaken a remodeling project knows how quickly all of the choices they must make can become overwhelming. Give these potential clients a hand by producing a series of videos that explain the advantages and disadvantages of different materials for countertops or flooring or showcase trends in lighting and other decorative fixtures. You’ll likely find that by dishing out a little free advice, you can earn major trust points with potential customers.

2. Be human.

One of the criticisms most often launched against Walmart is that it’s a big, unfeeling corporate giant with no face and no heart. But the Growers’ Stories spots show us that behind the Goliath, there are many Davids, and when we buy watermelons from Walmart, we’re actually buying them from third-generation farmer Jack Wallace in Edinburg, Texas. And we’re buying tomatoes from Scott Rush in Florida and strawberries from Mike Ferro in Oxnard, California. These are honest, hard-working Americans who care deeply about putting a quality product on your dinner table. The lesson here is this: Branding is important, always. But your company must be more than a brand. It must be human through and through. Whenever possible, you should remind your customers that they’re working with a team of people who are passionate about what they do, driven to exceed expectations and honestly apologetic if and when mistakes are made.

3. Counteract your brand’s vulnerabilities.

To sell anything – whether it’s a tomato or a tablet or a total kitchen remodel – you first must overcome the psychological objections of your customer. The current trend among foodies is the local food movement, which is focused on buying and using fresh, locally sourced ingredients. As cited previously, one of Walmart’s biggest branding challenges is their perception as the enemy of Main Street and the nemesis of the Mom-and-Pop. Therefore, Walmart is the antithesis of all things local, right? Not necessarily. As their Growers’ Story spot on tomatoes demonstrates, Walmart partners with small farmers around the country to distribute locally grown produce to nearby stores. And, in the end, if a customer is not satisfied with the quality of the produce, they can get their money back. The combined effect of these two messages is that Walmart has implicitly defended itself against a commonly held negative perception about its brand while negating any risk for customers in giving their products a try. What can you take away from this approach? Every brand has its weaknesses. While you don’t want to explicitly acknowledge these vulnerabilities, at every step along the way in the sales process, you should be aware of the red flags and concerns that might be giving your customer pause, and proactively counteract those inhibitions by providing  helpful (and true!) information that will help them make a confident buying decision.

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