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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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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Starbucks vs. Dunkin' Donuts

With billions in sales annually, coffee industry giants Starbucks and Dunkin' Donuts have demonstrated their ability to push their product in our caffeine-driven society. But when it comes to harnessing the power of the web to cultivate community around their brands, what are these two superstars doing to ensure that they keep and inspire loyalty among their followers, especially in the face of mounting competition between each other as well as increasing threats from newer players such as McDonald’s? Fame Foundry’s agents weigh in below:

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• The Architect

  Starbucks and Dunkin' Donuts’ approaches to creating meaningful community around their brands and extending their companies beyond a typical retail website is as different as their stores. Both websites have menus, nutrition information, online stores, store locators and social links -- the bare necessities for brands of this nature. The similarities end there. Dunkin' Donuts' version of extending itself beyond the walls of its stores is reminiscent of old gimmicks and half-hearted community-building ploys. There's a healthy version of its menu, links to a running site, some promos and a contest, and then we’re done. Dunkin' Donuts provides no opportunity for its fans to be a part of its website in any meaningful way. Starbucks has done better in their attempts. Noteworthy is the idea of improving the company with your ideas -- something that speaks to core fans. If you love the green Starbucks splash stick, then you should know it was developed in this way. The website allows visitors to share ideas, vote on ideas submitted by others and see which ideas have received the strongest response. It promotes community by encouraging visitors to play a part in improving the brand they love through their own opinions and innovations. Second to this, there’s a blog that’s halfway worth subscribing to if you’re an ultra fan. And while it is not exactly groundbreaking, it has a genuine appeal and seems to keep a decent personal touch to it with little of the usual corporate interference on the surface. Introducing new conveniences, products and free offers allows the blog to be something worth subscribing to for core users and brand evangelists. In addition, Starbucks offers a place for those willing to contribute to their causes. It’s not terribly engaging, but having a directory of people bound to stores and allowing for conversation within each store is a worthwhile effort. It needs more work in order to truly establish the store as a gateway to the local community.

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• The Craftsman

  A website should not only be an extension of a retail store, but it should also be the gathering place for your brand's community of followers. It's important to give that community a great experience when they visit your site, and design plays an integral role in that experience. Dunkin' Donuts and Starbucks handle this experience in very different ways, and both leave much to be desired. Let's start with Dunkin' Donuts. It is quite clear that the goal of this site is to push products. The first thing that I notice is the horrible Photoshop work on the home page. It's a collage of poorly photographed and cut out cups, beans and other products. It's obvious that none of the elements ever appeared together naturally. With coffee beans the size of walnuts and cups the size of buckets, the scale is so ridiculous that the whole thing comes off as cheesy and poorly produced. There is a lot of movement and visual stimulation on the home page, including pop-up menus, enlarging images and a hot pink drop-down menu. It seems that at any moment a man wanting to guess my weight or swallow a sword could jump out from behind that burlap sack. These elements are over the top and a detriment to the functionality, as the page takes several seconds to load. The navigation is passable, but there is a lot going on. First you have the main navigation with drop-down menus. Above that you have a secondary navigation that is one of the smallest I have ever seen at only six pixels. I would think that a store finder and franchising information warrants a larger size. And above in the upper right corner there are 4 graphics that appear to be buttons but do nothing when clicked or hovered over, creating confusion. Secondary pages on the site are cleaner, but there are still some alignment and spacing problems, and an overall lack of design consistency makes the site look thrown together. While some pages look pretty good, others look quite bad. On any given page there are several fonts and many colors, causing it to look very busy. Starbucks' website is in stark contrast to the Dunkin' Donuts site. It's clean and minimalist in a way that feels great on the home page, but once you dig into the site, the pages become bland and boring. The home page immediately gives you hierarchy with a large, interactive feature that is simple to navigate. Below that are three areas that funnel traffic with a minimal navigation system. The light background helps the warm, rich imagery pop, creating terrific contrast. Nothing is in your face or obtrusive. It's subtle and functional -- just what you'd expect from a brand like Starbucks. The secondary pages aren't nearly as strong as the home page. The primary and secondary navigation are minimal to the point of being boring. The leading on the navigation and body text is tight and should be expanded. The subtle drop shadow on the top of the canvas area makes that area appear as a frame and does nothing to enhance the page. Columns are narrow, and content feels cramped. There is wasted real estate under a poorly designed search bar which features a "go" button -- none of which feels like what you would expect from Starbucks. There is also a lot of inconsistency from page to page, especially in the way their products and offerings are displayed, which makes the browsing experience feel disjointed. Both sites have work to be done and leave me feeling disappointed. I expect better from these two captains of the coffee industry. While Dunkin' Donuts is over the top with its bright colors and flashy animation, Starbucks doesn't go far enough with its neutral colors and boring framework. Like a cup of coffee that's too strong or too weak, these sites need to find the perfect brew.

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• The Developer

  Anyone who has studied the metrics on their own website knows that getting people past the front page is a big deal, getting them to stay longer is even a bigger deal, and having someone feel that your site is worthwhile enough to come back is the ultimate score. Today's websites are as much about visitors consuming information, collaborating and interacting as a community as they are about selling a product or service.Interestingly, when comparing Dunkin' Donuts to Starbucks, it is clear that both companies have attempted to make their sites into something more than just a reproduction of their retail storefronts. They both have used various methods to try to capitalize on the enthusiasm of their customers. Dunkin' Donuts offers a feature that allows you to create your own donut, while Starbucks has launched a number of social websites that range from promoting specific product lines to advocating social change to soliciting suggestions to make your Starbucks better. Overall, Starbucks does a better job of providing compelling reasons to visit the site. However, both make the perplexing mistake of burying the content rather than bringing it to the forefront. Dunkin' buries these nuggets in favor of button graphics and forces visitors to hunt to find something interesting. Starbucks hides a single text link for each of their social sites below their Flash movie that gets in the way of finding something more useful. Both companies have very active Facebook pages with posts happening every few minutes -- not that you would know this by looking at the front page of their site. What's that you say? The goal is to sell product? Well, I have a question in return: Isn't it necessary to drive traffic to your site in order to sell products online? If there are 4.5 million fans on Starbucks' Facebook page posting every couple of minutes, you do the math. I'll just hold off on returning to these websites until either company gives me a reason to.

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