What an Effective Customer Loyalty Program Looks Like in 2019
Loyalty programs are nearly as old as retail itself. We all have seen how loyalty initiatives have evolved from punch cards to digital recordkeeping. The problem now is that these digital programs are becoming as dusty as the punch cards they replaced.
That is, unless theys provide real value to customers.
Customer loyalty is earned when brands leave customers not just satisfied, but excited. Loyalty programs can add to that special feeling when done correctly.
What Does Customer Loyalty Mean These Days?
Though prizes and rewards are fun, customers expect much more out of a brand. They expect brands to flow with their way of life — from practical needs like same-day shipping to value-based priorities like environmental stewardship.
Tina Mulqueen, CEO of Kindred Marketing Company, writes that customer loyalty programs are are shifting toward a new direction. Consumers today are bombarded with loyalty program “white noise,” she says. To stand out from other loyalty programs, companies have to offer more than free points and monetary rewards.
Consumers expect a seamless customer experience along their entire purchase journeys. This starts with engaging content and personalized communication. Consumers expect to be able to communicate with brands across social channels, through chatbots and via voice assistants. It is now so commonplace to receive personalized deals and product recommendations that any generic content at all might annoy your customers.
As customers move along their journeys, they expect to have control of delivery options and to receive regular updates on shipping status reports. “Your customers expect online shopping to be personalized, proactive and effortless,” writes Amit Sharma, Founder and CEO of Narvar. “If those expectations aren’t met, they’ll bring their business elsewhere.”
Where Vision Takes Hold
Customers don’t only expect their experiences to be amazingly seamless, they also expect to be recognized as valuable stakeholders in a company’s direction.
Rachel Barton, Masataka Ishikawa, Kevin Quiring and Bill Theofilou at Accenture point out that consumers understand the power they have through social media to praise or denounce a company’s behavior. They are quick to point out flaws in company practices, from production to customer service. They are even quicker to jump on company reactions to events or public issues. They readily share commercials they love when those ads promote positive themes or denounce prejudiced behavior. (Remember Gillette’s Super Bowl commercial? So do we.)
Consumers are very aware of the voice they have, which does in fact make them some of the most important stakeholders a company has. They expect to be treated as such.
On top of expecting a higher level of inclusion and voice, consumers want to be proud of the brands they support. This means they are more likely to show loyalty to a brand that shares the same values, whether it’s care for the environment or fair wages.
Modern consumers do still expect to be rewarded from companies they faithfully do business with, but they also expect so much more.
Loyalty Programs In Practice
Your marketing team already knows the importance of customer experience and brand management — but how do those intangibles translate into a loyalty program?
The three companies below meet high customer expectations head-on and build upon those expectations in their loyalty rewards programs.
REI Co-op Membership
Unlike traditional loyalty programs, REI Co-op customers pay $20 for a lifetime membership. People who join are told they are joining a welcoming community that gives them access to perks. In addition to an annual 10% dividend, members receive exclusive offers, access to in-store “garage sales” and special pricing on classes, activities, rentals and adventure trips.
This membership is formed around a community that enjoys and protects the environment. Bonuses are not dependent on the amount of money spent — you get them for being a stakeholder in the company. Personalized recommendations and offers are a large part of this program’s success. Access to expert advice on outdoor gear and training on topics such as wilderness medicine are also tailored to each customer’s individual profile.
TOMS Shoes’ Passport Rewards
TOMS Shoes started as a humble shoe company dedicated to matching shoe purchases with shoe giving — “One for One” is the mantra. Since 2006, the company has given away more than 60 million pairs of shoes to children in need.
TOMS has since expanded its social efforts into improving eye care, maternal health, malnourishment and clean water access in areas affected by extreme poverty. More recently, TOMS has become a forerunner in advocating for tighter gun legislation in the U.S.
TOMS encourages customers to “wear your beliefs.” Customers know that when they purchase from TOMS, they are joining a movement that stands for good.
The Passport Rewards program is broken into two levels: Level 1, Explorer and Level 2, Trailblazer. The language caters to globally minded adventurers. Explorers and Trailblazers both get member discounts, are entered into sweepstakes, are offered exclusive sales, receive anniversary rewards and gain early access to new products. Trailblazers, those who have earned 200 points, get free annual shipping and free gear.
Nordstrom’s Nordy Club
Nordstrom reaches a different audience, yet uses similar methods to draw customers into their loyalty club.
The Nordy Club is organized into different tiers based on levels of spending. Members who spend more at Nordstrom rise in rank, from basic Member status on to Insider, then Influencer, then finally Ambassador.
The basic rewards package starts with a 1:1 dollar-to-point system, first access to shop brands, access to beauty and style workshops, curbside pickup, online reservations to try on an item in-store and free basic alterations.
Rewards increase as members move up in status. Ambassadors, for example, get invitations to special events, personal double-point days, first access to Clear the Racks sales and access to in-home personal stylist services.
Lessons From The Customer: Go With What They Want
There are some basic lessons we can pull from these case studies. (Hint: Everything revolves around what the customer says and does.)
Customers know they can impact a company with their purchases, loyalty and referrals. They know their value and want companies to treat them with that respect. Companies that treat customers as stakeholders, partners and influencers earn their customers’ respect.
Sebastian Buck, Co-Founder of digital agency Enso, says the best brands build a sense of belonging. Humans long to feel connected to each other, to relate with one another, to spend time with one another and to feel valued. Companies that encourage events or activities for their members will give customers experiences that will uplift them emotionally and leave a lasting impression.
Adam Posner, CEO of The Point of Loyalty, puts it this way: “Transactions are forgotten, experiences are remembered.”
The three case studies above all emphasize being apart of a larger community. Whether adventurers, conscious consumers or fashion influencers, everyone belongs somewhere.
“In a lot of cases, the modern consumer isn’t looking for just a product,” writes David Shadpour, Co-Founder and CEO of Social Native. “They’re looking for a connection. They don’t need to be sold; they need to be inspired.”
Convenience Trumps Freebies
Free prizes used to be the motivating factor behind loyalty programs. Prizes are fun, but convenience is more valuable. For TOMS partners, that means free shipping. For Nordy Club members, that means curbside pickup and reserved clothing for trying on in-store.
Customers want their lives to be simpler, not more complicated. Greg Randall, Managing Director of Comma Consulting, says successful loyalty programs are simple to use and make the lives of customers easier.
Mary Meehan, Co-Founder of consumer trend agency Iconoculture, writes that people need apps and programs to flow with their life. Modern consumers are overloaded with information and choices. They need programs that simplify decision-making.
The ‘You Get Me’ Factor
Personalized emails and offers are standard in marketing today. Customers expect all email content, ads or in-app suggestions to be tailored to them. If content is not related to their interests or behavior, it will be immediately perceived as junk, sent to the trash folder, leaving the consumer with a bad taste in their mouth for that business.
According to a MarTech Series article on customer loyalty programs, personalized communication makes customers feel cared about and understood. Weaving creative and appealing stories to your larger audience is certainly important, but individualized messages and content are necessary to make customers feel valued.
The Nordy Club app, for example, detects when club members are near a store. It can then remind members that they have saved items that they can go check out. This allows customers to feel recognized and remembered.
Choose Your Rewards Wisely: Monetary or Not
Companies need to know their customers inside and out. They need to know what motivates them, what brings them joy and what beliefs they hold dear. Often, what brings customers most joy is not a monetary transaction, but an emotional experience.
Sometimes, free giveaways can motivate people to spend more. Other times, a giveaway can devalue a product. Get to know your customers and proceed from there. Sam Suthar, CMO at Acquire, says the main criteria for a reward is that it brings value to a customer. This can be a class, access to an exclusive event or the opportunity to contribute to a movement.
Companies that exude confidence, transparency and commitment to customer happiness are companies that consumers return to — and with their friends in tow. Customer loyalty programs cannot create this satisfaction alone, but they can play a big part in adding to the overall value your company has to offer.