Loyalty programs are a dime a dozen. Consumers across every category are swimming in them. That makes any loyalty scheme they come across feel like part of a big, ugly pile-on. Sure, punch cards have progressed to swipe cards (woohoo!) and apps, but most of the programs powering the cards are still the same lackluster campaigns, only half-heartedly trying to retain your business. It makes you wonder–does this company, whose card I’m carrying, whose app I downloaded, whose points I’m keeping track of, really want me as a customer? Does my loyalty actually mean anything to them?
Loyalty programs are a unique bargain with the customer. Learn how to build long lasting customers with these 5 trends (Credit: Rob Bye-98949-unsplash)
To gain a unique, more human, emotional perspective on loyalty, Olson1to1 brought me and Sivo Insights on as research partners to unearth foundational truths, insights, and essential elements that drive loyalty and foster successful loyalty programs. To do this, we designed a multi-methodologic, holistic research strategy. We started with a broad look at industry and cultural trends, followed by an immersive exploration of the real-life consumer experience through ethnography. Then we did a quantitative study to measure the qualitative findings. Olson 1to1 then applied their deep loyalty expertise to these findings to create a final comprehensive report, Humanizing Loyalty: A Road Map To Establishing Genuine Emotional Loyalty At Scale, which you can read here.
Working on this project, I examined the culture at large for the trends driving consumer loyalty and loyalty programs. I tracked down what’s happening in the world, tried to figure out what changing trends will influence loyalty and studied how people think about the loyalty programs they do know about. What separates memorable programs from forgettable ones? And how can companies create an unbreakable bond of true loyalty? My research revealed five key trends.
Trust is at an all time low creating additional challenges for brands (Credit: Pixabay.com)
1. Trust
Hackers. Spies. Fraudsters. A polarized society. We hear this all the time now: “The system is rigged” and “It doesn’t work for me.”
According to Edelman’s Trust Barometer, people’s trust in those around them has imploded, reaching an all-time low. Their 2017 report shows that “85% lack full belief in the system, this belief increases vulnerability to fear and further distrust.” That’s a steep hill to climb for companies trying to build loyalty.
Even companies that we have trusted in the past to gather our data take missteps. Recent revelations of Facebook’s data practices and Cambridge Analytica’s grab of millions of Facebook users’ data show that consumers are starting to finally understand the ramifications of giving up so much data. And that understanding may eventually change the way companies approach them, and the way consumers allow themselves to trust companies.
Reward points and miles are worth an estimated $48 billion in the U.S. In a recent survey that Connexions Loyalty conducted through IPSOS Public Affairs, they learned that “81% of Americans equate loyalty and rewards points with cash.” This perception of “cash” is more tangible and meaningful in their lives, not something abstract, like points or miles. And it makes a trusting relationship even more important.
Another intriguing aspect of trust in a loyalty program is a phenomenon called The Bystander Effect, reported in Academy of Science. The researchers concluded that loyalty program managers must pay equal attention to the top members of a loyalty program as they do to the “bystanders” excluded from or witnessing the program interactions. How do the experiences of both groups affect feelings of gratitude, status and fairness? Waiting to get on an airplane is a site of The Bystander Effect. How do less prestigious club members or non-members feel when witnessing how the platinum members are treated? And how is that likely to affect their interest in becoming a member?
What Trust Means For Loyalty Programs
Loyalty programs are a unique part of the overall marketing mix. In the case of these programs, the brand is typically asking for something before the customer gets anything in return. They usually don’t walk away with anything in a bag. The customer must simply trust that they will get something out of the bargain.
– Make everyone feel special. What is the program doing to incent people on the other side of the velvet rope?
– Consumers act according to the rules, and when there is a fair and relevant reward, trust is built. This is where true loyalty comes from. If a loyalty program is too complex or out of reach—trust won’t ever be achieved.
Customer identity plays a growing role in loyalty strategy. (Credit: Scarleth Marie-flic.kr/p/5Zteh3)
2. Identity
Once trust is established, the customer wants the brand to know them. They want to feel seen and heard. Tech innovations and data analysis are evolving to target customers with specific offers that are more value add.
This, too, is a bargain that’s struck with the customer. Customers agree to give you their data. In return, be measured, relevant, and personal; let them know they are more than a number, that they’re not just padding on your database.
A customer’s own sense of identity within the culture is playing a role of growing importance in the loyalty mix, as well. While a customer’s demographics are important, it is customer lifestage, geo, age and purchasing behavior that needs to be accounted for. A recent Wunderman study reported that “56% of respondents said they feel more loyal to brands who “get me” and show a deep understanding of their priorities and preferences.”
Customers need to know your brand “gets them.” The Nordstrom app is a great example: It allows users to save items in an online wish list. When the customer is near a store, their app pushes an alert to the customer, nudging them toward a visit and, it is hoped, an immediate purchase. Meaningful access or choices based on “knowing” a customer add significant value to a loyalty program and can even make being a member essential.
What Identity Means For Loyalty Programs
Technology has the power to customize the loyalty experience rather than forcing companies to offer generic “one size fits all” approaches. One of the benefits of a membership becomes: “You know me.”
– Deliver relevant content within the right context so that the program and the technology are enhancing a customer’s experience – not getting in the way.
– If your program doesn’t inspire with unique stories, access, community, or the primal experience of being seen and understood, it will simply be one of many.
Seek to achieve engagement through share of emotion.
3. Experience
Now that you know who your loyal customers are, you can use that data to enhance their experience. Remember, though, that the bar is being raised in the world of experience. We can be lulled by consistent yet boring programs — or engaged with novelty or surprise. If it’s real, fun, tangible and compelling, it’s also sharable.
The demand for experience is growing. This quote from AdAge is an interesting measurement of this shift in the retail world. “Many consumers are favoring experiences over more material purchases. Mirroring this shift, an index of hotel, restaurant and leisure stocks has gained 25% since the start of 2016, while apparel stocks have fallen 18%.”
But how to create experiences for your customers effectively? FastCo research showed that popular brands were those that could make you laugh, or cheer, or lean forward and take notes. They’d stopped hammering away at share of mind, and instead tried to achieve share of emotion. In a follow-up study of internet content, results showed that there were four kinds of emotionally compelling content: funny, useful, beautiful, and inspiring.
Accenture reported on an experience-driven program called Priority Moments from O2, the UK’s leading provider of mobile services. This location-based loyalty program focused on discovery by providing a steady stream of unique experiences to users, discount offers from high street brands, and exclusive access to “must-see” live events to customers based on their interests, behaviors and geo-locations. “It was one of the UK’s fastest-growing programs, it delivered a multi-million pound churn (loss)-reduction and helped the company achieve conversion rates of up to 95%”
What Experience Means For Loyalty Programs
Traditional marketing and advertising simply happen to us. But customers actively take part in loyalty programs. This is a unique opportunity to interact with customers, so it must be intentional and strategic. It’s not enough to simply communicate. There has to be an engaging experience that drives behavior.
– Experiences by definition change behaviors. People opt in again (good experience) or opt out (bad experience). Create a test to confirm that your program has changed behavior.
Effective loyalty programs can soothe pain points and keep your life on track
4. Flow
We are all time-starved and info overloaded. “Infobesity” is now a thing. But flow is what we want. We want to keep our lives on track. Loyalty programs can soothe the pain points that interrupt our flow and keep the day moving forward.
Susan Menke, a behavioral economist I interviewed for this project, reported a significant phenomenon in how we make choices. She refers to decision fatigue and cognitive fatigue as the opposite of flow and seamlessness. We are making too many choices that tax us and we feel overloaded. We need to spend our cognitive bank account on important things and not on things that are already operating well or don’t matter as much. If we get into a reasonable habit with a brand, economic incentives are often not enough to get us to make a switch to a new brand. We just don’t have enough left in the cognitive bank to make the decision to change. Once loyalty (or habit) is built, something more meaningful needs to draw our attention.
Delta’s app, for one, keeps the flow going by being relevant and meaningful. Their app lets you know when “your bag was just loaded on to the plane.” This is MY bag not ALL the travelers’ bags. They provide pertinent information in the moment. There is nothing more time consuming and stressful than travel and Delta makes it easier in the moment. You don’t need much more content than that which has to do with your flight and your flying experience.
What Flow Means For Loyalty Programs
Customer satisfaction is more important now than ever because we have access to so much choice. That makes the barrier to switch brands very low!
– A frictionless marketing strategy must tie to the loyalty program. It can’t be just a service or marketing lever, it must be a benefit of being a member.
– The loyalty program must be a factor that “eases my life”. That, truly, is a reward.
Go beyond simple transactions and connect with shared values–what really matters to customers.
5. Meaning
The need for social connections, meaning and purpose are central to the human condition. They’re key to a happy existence and drive behavior in many aspects of life. It’s no wonder we see the rise of mindfulness, social good, triple-bottom line, and purpose-driven everything. Brands are responding to this human need by enabling customers to act on their values and goals, earning loyalty with relationships, not transactions.
Overwhelmingly, consumers expect more from brands than they used to. Havas’ Meaningful Brands study showed that “75% of us expect brands to make more of a contribution to our wellbeing and quality of life,” yet only 40% believe brands are doing so.
What we’re seeing in response to this consumer shift is brands now enabling customers to get what they really want for their lives through the loyalty program. Programs help them save money/pay off loans, get fit, celebrate an anniversary, take a trip, or make the world a better place. It’s this form of interaction that builds a relationship through meaning and ultimately results in loyalty.
– Lululemon inspires engagement through Sweat With Us free classes around the world
– Kroger Community Rewards contributes to shopper chosen programs based on transactions
– REI let’s you #OptOutside aligning with your environmental values
What Meaning Means For Loyalty Programs
Brands need to reassess and refine their purpose. They need to look at their values to determine “what are we in service of?” They need to ask, “how does our program strengthen our relationship with who we serve?”
– Your loyalty program must be tied to your brand’s core values, then looped around the experience your customer is looking for, not the experience the company thinks the customer should have.
Successful loyalty programs require engaging with program members beyond purchase transactions.
– Anything that breaks from the points-only generic program has a huge effect and potential to change your relationship with the customer.
This framework of five trends served as the foundation for the next stages of our research into true loyalty. They map directly to the findings of the final report’s 6 drivers that create a genuine, lasting and emotional connection with your customer. You can read the final report here.