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PODCAST: How to Build Brand Loyalty Today and Tomorrow

Consumers are human beings first. This is important to keep in mind when you think about building customer loyalty.

On the surface, that can be easy to remember, but you’d be surprised how easy it is for people to forget that. So many businesses today are in this downward spiral of reducing customers to a statistic or entries in a database. As marketers, we often think of consumers in segments and there are good reasons for doing that, however – it’s critical to remember at the end of the day, you are dealing with human beings – and you have to understand what makes them tick in order to influence them. And that’s what marketing is all about.

The shift over the last year or two to the focus of AI over big data has been very helpful in solving the problem of dehumanizing consumers. Big data was sort of a useless term – it didn’t really tell us anything. Artificial intelligence is essentially a way to move beyond thinking of consumers in terms of numbers and humanize it into the experience.

Maritz Loyalty’s VP of Loyalty Strategy, Barry Kirk, was recently featured on the On Brand Podcast: How to Build Brand Loyalty Today and Tomorrow with host Nick Westergaard. In this episode, Barry expands on the recent shift to Artificial intelligence, as well as:

  • How loyalty is today
  • The modern forms of brand loyalty
  • The impact of neuroscience on marketing
  • Tips on how to focus your own customer loyalty program

Click here to listen to the full podcast!

Loyalty Program Design: Ignore Customers, Increase Returns

When speaking with brands on loyalty program strategy, it’s clear companies know they should be utilizing their data and personalizing the user experience, but there is often a barrier of hesitation to openly treat customers differently. This hesitancy is rooted in the fear of ostracizing a portion of their consumers who are deemed “less valuable”. Why can’t we simply strive to provide every customer the same high-end treatment that they deserve? Well, because they don’t deserve it.

Not all customers are created equal. A successful loyalty program design allows a brand to:

  1. Focus on Best Customers: New friends are great, but old friends are invaluable. Your brand’s best, loyal customers will celebrate triumphs and help carry the business through rough times. They are different from the impulse purchase crowd and should be revered with your attention.
  2. Make Customers Feel Important: Customers expect special treatment. Research conducted by Forrester indicates that 59% of US online adults who belong to a customer loyalty program say that getting special offers or treatment that isn’t available to other customers is important to them.
  1. Reward Good Behavior: When customers exhibit positive engagement behavior with your brand, recognize it. Furthermore, let them know they will be rewarded for being good. SWA’s “Companion Pass” and Sephora’s “Rouge” are examples of how implementing aspirational status tiers with meaningful rewards can drive fierce loyalty.
  2. Maximize Promotional Budget: Offering all customers the same discounts, rewards, and communications can get expensive – and boring. Segmenting customers within a loyalty program will allow you to track the types of products they buy, how often they redeem, and how well they respond to communications, allowing companies to track the progression of a consumer’s journey with their brand – ideally even leading to predictive analysis.

Of course, there are instances where treating every customer the same does work. Take Publix, for example. At the end of last year, Loyalty360 published a post about Publix & how their “treat every customer the same” mindset has helped them retain brand loyalty over many generations. The grocery-chain doesn’t necessarily have a traditional loyalty program, but they do have many loyal customers. Their belief is that every customer should be treated to the same superior customer service and they attribute their long-term brand loyalty to this consistent treatment of customers. So how has this strategy worked so well for Publix?

First, they emphasize their core principles – remaining true to providing competitive prices, quality products, and customer experience. This ties directly back to their slogan “Where Shopping is a Pleasure” – an easy to digest value prop which they ensure is carried out by their eager-to-help, positive associates.

Next, they deliver consistency while also adapting to the industry surrounding them.  Customers return week after week because their in-store experience is a positive, known commodity. For consumers with more evolving needs, Publix has several online ordering options, including the increasingly popular home delivery powered by Instacart.

While this informal loyalty approach has worked for Publix, this wouldn’t work for every company seeking to achieve brand loyalty. Publix has the distinct advantage of being a “ritual vendor” (The average US household made 1.5 trips to the grocery store per week in 2017) and usually consumers repeat at the same store due to proximity and familiarity – two inputs that make a habit hard to shift once engrained. Publix also has a long history of superior customer service, and unfortunately brands looking to retain and engage customers in the here and now can’t afford to wait 80 years to build up that kind of reputation.

Before dismissing the Publix case study as irrelevant to your company’s situation there are aspects of the Publix secret sauce which every brand should aim to replicate, namely creating a resonating value prop + delivering your core product well. Without these key foundation blocks, a brand will not succeed no matter how clever their loyalty program design is.

So how do you determine which strategy is right for you?

As you can see, no loyalty program is one-size fits all. Program design must be unique and tailored to the brand’s needs and more importantly, their customer’s wants and needs. And while Publix doesn’t operate on a formal loyalty program, their initiatives over the last 87 years have formed loyal customers who stay away from competitors.

 

The State of Global Loyalty: A Conversation about Latin America (Series)

The State of Global Loyalty: A Conversation about Latin America

What does customer loyalty look like outside of the US? How are companies around the world addressing the evolving challenges of customer retention? And what can US loyalty marketers learn from their global counterparts?

Welcome to our Global Loyalty Series! Seeking to find those answers, I recently posed questions to loyalty experts in our Maritz Global Partner Network, challenging them to offer insights unique to their regions around the world.

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This week, I connect with Mario Giuffra, Managing Director at Promotick.

In his early 20s, Mario founded Promotick, the first loyalty and incentive company in Peru, with his twin brother.  They started managing successful programs for big companies in many different industries:  banking, airline, supermarket, telecommunications, etc.  It didn’t take long before Promotick had expanded throughout Latin America.  They currently operate more than a hundred programs in nine countries.

Mario, what are some of the key challenges and opportunities companies in Latin America are facing when it comes to retaining loyalty program members?

One of the biggest challenges that companies face nowadays regarding the retention of users is the amount of loyalty programs that members have access to. Airlines, supermarkets, credit card programs and even smaller niche programs are adopting bigger and more complex offers over time. In this scenario, mechanisms of differentiation need to be more creative and dynamic to keep programs on track. This can be done through the following strategies:

  • Increasing use of technology to get ahead of new apps.
  • Build a solid structure of data and customer information management to understand their needs better.
  • Look for strategic alliances that allows more added value towards customers. A company rarely specializes in all kind of rewards, which is why finding the right partners strengthens the offer of benefits.

How are Latinamerican government regulations influencing loyalty strategies?

In some Latinamerican countries, tax policies are requiring the companies to pay taxes on some rewards redeemed by customers. This makes the products much more expensive and deteriorates the relationship between accumulated points and dollars spent, which in the end lowers the perceived value of the rewards.

Also, there are contingencies in the work environment when giving rewards. Tax collectors make companies pay taxes if an employee receives a reward. As in the previous case exposed, the product gets more expensive and this strategy of motivation becomes non-viable.

What does customer retention mean to you? What does the ideal, loyal customer look like?

For me, loyalty represents the preference for a product, service, or company over time in a constant and sustained way. Understanding the preference as the first option when it comes to the purchase.

Loyalty is the result of giving a good service at a reasonable price. A loyalty program should be built, therefore, after the service has been given efficiently. We cannot pretend to implement a loyalty strategy if we are not capable of giving the product or service offered initially. For example, if we want to implement a loyalty program for a newspaper company, first we must make sure that the delivery of the newspaper is done well and on time every day. Otherwise, the loyalty program will not work.

The ideal customer is one that buys our products steadily and recommends them to others by their own initiative.

What’s the biggest piece of advice you have for loyalty marketers?

When implementing a program, I consider that the following factors will help maximize the chances of its success:

  • Understand the customer by using all the information provided. It is important to watch and listen periodically.
  • Maintain high levels of communication throughout the duration of the program.
  • Utilize different platforms for operation.
  • Offer effective customer support.
  • Provide ease of use and understanding – clear rules, easy interaction and simplicity.

Finally, what is your wish-list for an ideal loyalty program for Latin American consumers? What would this program look like for participants?

The ideal loyalty program is one that can understand consumer needs and get ahead of them timely. This shows that it understands consumer behavior and  preferences. With this initial strategy, the program would always surprise participants with things that are inside their world of expectations.

Another initiative that I would like to see in a loyalty program is the capacity to provide future credit based on my consumption behavior history. For example, if I lack 5% worth of points to obtain a benefit today and my purchase behavior maintains the same for a long time, I would like the program to allow me to use that 5% I need against my future purchases.

About Our Global Partners

Maritz partners with top loyalty practitioners worldwide as part of the Global Strategic Partner Network.  Carefully vetted, trained in Maritz’ solutions and in regular communication with our solution leaders, Strategic Partners bring geographic market-specific expertise to our global clients.

The State of Global Loyalty: A Conversation about Europe (Series)

What does customer loyalty look like outside of the United States? How are companies around the world addressing the evolving challenges of customer retention? And what can US loyalty marketers learn from their global counterparts?

Welcome to our Global Loyalty Series! Seeking to find those answers, I recently posed questions to loyalty experts in our Maritz Global Partner Network, challenging them to offer insights unique to their regions around the world.

First up, I connect with Michael Lausenmeyer, Managing Director of Boost Loyalty Europe.

Michael is experienced in CRM & loyalty consulting, OMNI-Channel Marketing, and international project management and offers significant experience from the worlds of  retail, manufacturing, media, pharmaceutical, travel, finance, energy industries.

Michael, what are some of the key challenges and opportunities companies in Europe are facing when it comes to retaining loyalty program members?

One challenge is how to make members redeem their points and  how to keep them active in the programs. It is not so much that people quit the program, they even collect points, but they do not get involved enough to redeem points. There’s also the question of what to entice the members with. There is a tendency to focus on the short-term effect of monetary rewards, which only fuels the need for additional and higher discount measures and is therefore hardly sustainable.

We see great opportunity in digital solutions. Seamless collecting and redeeming of points via a personal device for one, but also engaging customers in new and different ways with new communication technology. Customers are much more inclined in sharing data when they get something in return.  Also, rewarding engagement has to be much more part of loyalty in the future. This personalized yet automated communication and attention to the individual customer is the key to activating them profitably.

What cultural changes are you seeing in Europe that are affecting customer loyalty?

In many European Countries there will be a further shift towards the use of individual handheld devices and even better coverage and faster connections. Brand and loyalty programs will be competing even more intensely for a place on the first screen of smartphones. There will be a shift in demographic with the Boomers retiring and a new generation of shoppers moving up. For them, monetary rewards are still relevant, but that is simply not enough to get close to the consumer of the future. New technologies and new loyalty concepts will be influenced by and will in return influence shopping and loyalty behavior.

How are European government regulations influencing loyalty strategies?

Changes in data regulations might have impact on the way personal data must be handled in the near future. There will be an optimization in Europe starting end of May. I cannot imagine there being less transparency in the future, but I would guess there will be many more security regulations that need to be met when handling customers’ data.

What’s your best piece of advice for loyalty marketers?

Stop doing loyalty like it was done ten years ago and don’t be led by personal preference. Adapt your programs and measures to your customer of the future not the current one.

Who do you see doing a great job at driving loyalty or consumer engagement?

I am member of several programs, but mainly trade or airlines. I really like the mechanism of Cookie Clicker though, because in my opinion, in its simple way this website applies pointers from behavioral science very effectively.

Finally, what is your wish-list for an ideal loyalty program for European consumers? What would this program look like for participants?

  • Relevant Service and information
  • Seamless applicability
  • Transparency in data use
  • Rewards for my time and contribution not just money spent
  • Impeccable technical set up and design
  • This program would put the participant first, giving them a reason to be part of the program.

About Our Maritz Global Partners

Maritz partners with top loyalty practitioners worldwide as part of our Global Strategic Partner Network.  Carefully vetted, trained in Maritz’ solutions and in regular communication with our solution leaders, our Strategic Partners bring geographic market-specific expertise to our global clients.

3 Trends that Rewrote the Rules of Loyalty Marketing in 2017 (Part 3)

(This is the third in a three-part series on shifts that occurred in 2017 that will have long-term impact on the loyalty industry. Part 1: Liquid Currency covered the adoption of pay-with-points solutions and Part 2: Loyalty Program Fraud covered the increasing awareness of program hacking risks.)

Shift #3: Coalition Loyalty Programs Stumbled

If you were one of the many loyalty experts predicting the likely failure of any coalition loyalty model in the US, you might have ended the year enjoying a bit of schadenfreude.

2017 was simply a tough year for coalition loyalty to catch a break.

While the dominant form of loyalty program outside of the US — one wherein members can earn and redeem points freely across a defined network of complimentary brands (the coalition) — a large-scale coalition loyalty initiative has never succeeded in the US. That seemed about to change when American Express announced the launch of Plenti almost three years ago. But since then we’ve witness not just the multiple stumbles experienced by Plenti, but challenges with both of its Canadian-based counterparts:

  • Plenti – While boasting more than 30 million members and the support of Amex, Plenti has struggled to attract and retain key partners to maintain a strong coalition. And it ends the year seeing the exodus of more partners and declining support from their parent entity. 
  • Air Miles – the Canadian-based coalition program owned and operated by LoyaltyOne suffered a significant PR hit starting late in 2016, when Canadian media began to cover the upcoming first-time expiration of Air Miles points. Due to overwhelmingly negative public reaction that continued into this year, Air Miles reversed their decision and agreed to reimburse members who had already dumped their points. That decision resulted in a multi-million dollar loss, much of that in unrealized breakage. The incident pushed some Canadian legislators to pursue legal restrictions on loyalty point expiration policies. AirMiles subsequently announced other changes to their program in an effort to gain back some of the member good will lost over their point expiration issue.
  • Aeroplan – the Canadian-based coalition program, owned by Aimia, was jolted earlier this year when its key partner, Air Canada, announced it was leaving the relationship by June 2020 to establish its own proprietary loyalty program, a move that could potentially cost Aimia millions of dollars in lost revenue and leaves their coalition program without an airline anchor brand.

So, as I noted — a tough year for North America coalition loyalty schemes.

Its the Consumer, Stupid

When I first wrote about Plenti back in March of 2015 I asked, “Is Plenti the holy grail of loyalty?” I outlined my rationale for being skeptical that a coalition could succeed in the US, while expressing optimism that if any entity could pull it off, it was Amex. My main concern was whether US consumers would actuality understand and embrace a coalition loyalty program.

New data from a Maritz 2017 consumer study only reinforced my concerns:

  • 50% of surveyed consumers said they were not familiar with Plenti at all (although of those who were, a majority had a positive or neutral view of the program). 
  • Less than half of self-identified Plenti members said they have ever redeemed for a reward through the program.
  • The majority of members said they only purchase from one or two coalition members (defeating the main value prop of the coalition model)

Amex might still put it out, but its just as likely that the stumbles experience by Plenti and the significant challenges with Aeorplan and Air Miles portend an inevitable decline of the coalition model the US.

Implications for Loyalty:

When Plenti debuted it was considered a potentially serious threat to proprietary loyalty approaches. Coalitions offer brands the allure of participating in a loyalty scheme without the up-front costs and commitment that can come with launching their own program. But the last year has shown the weaknesses of the coalition model, particularly in its inability to engage US consumers. And when you take into account the challenges with Canadian coalition schemes, it seems that many companies are making the calculation that they are better served by owning their own program where their brand rules supreme. Moving into 2018, its a safe bet that proprietary loyalty will continue to have strong hold over the US loyalty market.

Thanks for following along with our 3-part series – Maritz Loyalty wishes you a Happy New Year!

3 Trends that Rewrote the Rules of Loyalty Marketing in 2017 (Part 1)

If you don’t like change, 2017 was a bad year to be a loyalty marketer.

Change in the loyalty space is a good thing. Necessary even. Most of our legacy approaches were established when Max Headroom and Duran Duran were still a thing, and have evolved very little since. Stubbornly, loyalty marketing has remained static while the whole world has changed around it.

That’s why we embraced the crazy number of shifts we saw this year that bring the promise of upending our thinking about customer loyalty. From blockchain to conversational commerce, to the ascendancy of the Millennials, most of these changes are still nascent. But three — liquid currency, fraud and security, and the stumbles in coalition programs — have already fundamentally shifted the landscape.

Shift #1. Points Currency Gets Liquid

For most of the history of loyalty marketing, program currency has been locked inside of proprietary reward experiences. Consumers could belong to multiple programs, but the currencies for each lived within walled gardens that purposely limited their reward options. Points could only be redeemed within a catalog specific to each program, or currencies could only be transferred within a tightly managed partner network.

In 2017 an evolution in redemption options finally hit the tipping point, breaking down many of those those garden walls. “Liquid currency” (a term first heard at the Loyalty Academy Conference in 2016) refers to a pay-with-points approach that enables loyalty points to be redeemed out in the big wide world, just as if they were cash. Examples of programs now embracing liquid points include US Banks’s Real-Time Rewards solution, Citi’s Shop with Points and La Quinta Inns and Suites’ Redeem Away! program.

“Liquid” is the best descriptor for this shift because it illustrates the continuum of pay-with-points options. Each solution allows its own specific degree of flexibility or liquidity as to where and how points can be used.

Some solutions offer ultimate liquidity by enabling program currency to be used exactly like cash at any point of sale. Others are only moderately liquid, allowing points to be used only within specific retail settings (for example, Starbucks Rewards allows stars to be redeemed only for Starbucks products at the POS using their mobile app). A number of hotel brands now allow points to be used just like cash, but only during stays at their branded properties.

Despite these varying degrees of liquidity, what does appear clear is that brands embracing this change are looking to grab consumer attention by introducing as much flexibility as possible in the usage of points currency. And the programs offering the most liquidity believe they’ll have the upper hand.

What does this change mean for loyalty marketing?

For consumers, liquid currency opens the door to a significantly more frictionless redemption experience. According to new Maritz research, consumers cite rewards being too hard to earn or taking too long to earn as their primary reason for leaving a loyalty program. Liquid currency directly addresses that point of friction by enabling program members to redeem points much more frequently, for an almost infinite number of “reward” options, and at very small increments of value.

For example, I recently redeemed less than $5.00 worth of Amex Membership Rewards points to pay for a meal at the Midway Airport McDonald’s. That kind of redemption experience — a far cry from working a year or more earning points toward a high-value reward item — will become more the rule than the exception. And as members embrace points being increasingly more fungible, its likely they will no longer think of redeeming points at all, but rather of spending points.

For program managers, liquid currency will challenge your assumptions as to how programs have traditionally worked. Members will likely redeem more frequently, and at lower point thresholds. Paying with points also means redemption patterns shifting away from low CPP rewards like merchandise and in-kind options, which likely will drive up program costs. Spending points outside the brand experience — especially on pedestrian everyday purchases like groceries and gas that have little “memory halo” — also may well have a declining effect on brand loyalty, driving consumer attachment more toward the currencies than to the brand itself.

Its clear, though, that liquid currency will soon be table stakes for any competitive loyalty program. This means brands will need to be vigilant in measuring and evaluating the influence of this new form of redemption on both brand engagement and retention.

Stay tuned for Part 2 and 3 of this post to learn more about the impact of fraud and coalition loyalty. 

Rewarding Customer Feedback: Build Loyalty While Gaining Consumer Insights

Consumers have opinions on just about everything. So, what if a company’s loyalty program rewarded customers for the opinions that matter most to the business?

Loyalty programs have traditionally focused on rewards and points for purchasing behavior. As a consumer, I try my best to be savvy about participating in loyalty programs of brands I consistently buy from.

A program I am highly engaged with is the Southwest Rapid Rewards program. I have a Southwest credit card, and like most millennials, I typically prefer being rewarded with experiences.

Because I do my best to get the most out of the loyalty programs I participate in, I pay close attention to the communications I receive from brands I’m subscribed to. That’s why this recent communication from Southwest caught my attention:

The email invited me to be part of a select group asked to participate in Southwest’s Rewards for Opinions panel. This offer gives the opportunity to take surveys on your own time and — this is the key part — receive Rapids Rewards points for completing each survey.

Rewarding customers with points in exchange for their feedback can be an effective strategy for keeping already loyal customers increasingly engaged for a few reasons:

  1. Rewarding for feedback makes customers and program members feel valued and special.

The language in the Southwest email presents the Rewards for Opinions panel as an exclusive group. When I saw that the panel was “by invitation only” I got the sense that I’m a valued customer because I was selected and invited to participate in this program. Likewise, the phrase “your opinions are worth thousands of points” tells the customer that their feedback on the brand experience literally has a dollar value.

To add to that sense of value, brands could consider ramping up the element of status by inviting top point earners to a “most valued customers” opinion panel, including formal invitations and a surprise gift for participating.

  1. Member surveys provide insights about consumers and their demographics that companies and brands can use to shape future business initiatives.  

Many of the surveys in the Rewards for Opinions portal asked about my demographics, spending habits, and much more.

A brand can leverage these surveys to collect new kinds of customer data that loyalty programs do not usually collect.  That information can, in turn, be used to make the loyalty program even more personal. The survey information can also be used by brands to further segment their customers and provide more insight into their spending habits and purchasing decisions. And by positioning the surveys as a tool to provide them with a better brand experience, it’ll be much easier to get a high level of engagement and candid response.

  1. Points for surveys help members increase their earn velocity.

While I am active in my Southwest Rapid Rewards account, I don’t travel often enough to accumulate as many points as I’d like. The Rewards for Opinions panel makes it easier for me to quickly earn points without a huge time commitment.

Based on new consumer research data from Maritz, the most common reason for disengaging from a loyalty program is rewards/benefits being too hard to earn or taking too long to earn — 44% of consumers rank it as their top reason for quitting a program. Member surveys provide an additional, quick way for members to earn points. If a consumer doesn’t travel frequently like myself, it might be hard for them to earn points. If they were given the option to take surveys to earn points, they could earn and redeem more frequently.

Adding a survey element to a loyalty program is a great way to diversify loyalty program offerings, gather information about your customers, and increase engagement within your loyalty program. Brands should consider this in their program design to further drive engagement and loyalty.

Do you receive rewards for providing customer feedback? If so, which programs do you participate in?

3 Ways to Make Your Loyalty Program More Social for the Holidays

Most consumers join loyalty programs with self-serving motives.  This makes perfect sense considering that the explicit promise of most programs can be distilled down to “do this, get that.” But, that doesn’t mean that consumers don’t appreciate brands who give them the flexibility to use their points and miles to give to others.

Member Engagement Through Gifting

New consumer research data from Maritz shows that using points to reward others is a significant part of the modern loyalty program experience:

  • 54% of consumers have gifted a loyalty program reward during the holidays
  • 35% use program points to gift throughout the year
  • 8% exclusively use points for gifts for for friends and family

Charitable giving also appeals to consumers. The same Maritz research found 40% of buyers would be at least moderately more likely to participate in a loyalty program that offered charitable giving opportunities, and 14% said it would greatly influence their participation. (See the infographic at the bottom of this post for more information)

Most Programs Miss the Opportunity to Get Social

Unfortunately, most loyalty programs continue to focus solely on “mercenary” offers—those that appeal to a consumer’s sense of self (i.e., “what do I get out of it?”). While this can be effective, the key to lasting customer relationships are “multi-loyalty” programs that go beyond simply earning and redeeming rewards.

Here’s why — there are four primary drivers that motivate people, according to a neuroscience-based model developed by the Harvard Business School. One of those is the Drive to Bond, combining the desire to connect socially with others and a tendency to recall social experiences more easily and more positively. So, appealing to a consumer’s need to experience social connection (ie, “What can I do for somebody else?”) can set your loyalty program apart and boost redemption rates.

3 Strategies For the Holidays

The holidays present a particularly advantageous opportunity. This is the time of year when people are most inclined to give, so why not encourage consumers to focus that generous spirit on their loyalty rewards, too?

1. Gifting

Allow program participants to redeem their points to buy gifts for family and friends. The goal is to make it easy to do holiday shopping and ship gifts directly to recipients. As an example, Choice Hotels allows members of its Choice Privileges program to redeem points for gift cards, to take the hassle (and money crunch) out of Christmas and Hanukkah shopping.

2. Shared Reward

Enable program participants to join forces to earn one shared reward (for example, children banding together to give their parents a dream vacation). British Airways excels in this area, allowing as many as seven members in the same household to pool miles. One person can redeem them and draw proportionally from each member’s account. Members can also redeem awards for up to five others not living in the same household.

3. Charity

Give members a chance to convert points or miles into a donation to charity. This allows the consumer to feel good about making the world a better place by making an impact at a local, national, or global level. Jet Blue’s True Giving program allows customers to donate TrueBlue points to more than 2.5 million causes in its database.

Offering gifting and giving options allows brands to communicate to consumers that they care about what matters to them. It helps users fulfill their drive to connect with community. And that’s a great way to stand out from the pack.

How Consumers Are Gifting

 

 

How Influencer Marketing Builds Customer Loyalty

I love Instagram.

Out of all the time I spend on social media, I spend the most on Instagram, scrolling through pictures of food, outfits, and places I want to travel to.

One of the accounts I follow religiously on Instagram is the account @SomethingNavy. The account is run by Arielle Charnas, a fashion blogger. She has over 10 years of experience in the industry, and works with tons of brands, including: First Aid Beauty, Secret, & designers like Rebecca Minkoff. This summer, she announced a collaboration with the brand Treasure & Bond, and the clothing collection was sold through Nordstrom. The clothing line was set to launch the last week of September.

Charnas is an example of a new industry dedicated to “Influencer Marketing.” Simply defined, Influencer Marketing focuses on using key leaders to drive your brand’s message to a larger market. Rather than marketing directly to a large group of consumers, you instead pay influencers to get the word out for you through their followers. Instagram is the best platform for bloggers like Charnas to spread their influence.

Influence Drives Purchase

I spent the weeks leading up to Charnas’s September launch talking with my friends who are also loyal followers. We exchanged pictures of the different pieces of clothing, discussing which items we planned on buying. We even set up a group chat solely dedicated to talking about the collection. The day the collection was set to launch, alarms were set, and we were ready to shop. When 8:00 am CST hit, there was a problem: Nordstrom was experiencing issues on their back end, and they had to wait to individually load the pieces one by one. But my friends and I didn’t close out of the Nordstrom website. We stayed on our computers until the items we wanted became available because of our dedication to the brand Charnas presents on her Instagram.

Despite this technical glitch, the clothing line was sold out. Several customer service issues could not stop consumers from shopping this brand. I was able to get the items I wanted. When the clothing line was initially announced, Nordstrom stressed that there would not be a restock. After the line was sold out, Nordstrom announced they would be restocking the collection in December. And within the week, my friends and I had received our pieces.

Influencing Cult Loyalty

Influencer Marketing presents a great opportunity for achieving Cult Loyalty. My friends and I exhibited cult loyalist behavior in this buying scenario. For a refresher, Cult Loyalty refers to being loyal because the brand reflects personal identities and values. By placing an influencer in front of a product, it adds that personal touch and allows a deeper relationship than a relationship with a consumer brand. Arielle Charnas is not only a fashion blogger, she’s a businesswoman, wife, mother, and friend. She doesn’t use her platform just for posting outfits – she also posts videos spending time with her daughter, and dedicates time to answering questions posed by her dedicated followers. My friends and I were driven to purchase her clothing because we identify with the image she presents on her social media platforms. In terms of reasons for referring someone to a brand, Maritz market research data shows that Cult Loyalists are the consumers most motivated by having friends/family join in the brand experience with them (43%).

By following along with the @SomethingNavy instagram account, my friends and I could follow Arielle’s clothing line from the early stages, all the way up to execution & release. Nordstrom, Treasure & Bond, and @SomethingNavy were all able to engage in Influencer Marketing to ensure the success of the clothing launch. If this were any other brand, consumers would have disengaged with the launch as soon as problems arose. But because of the personal experience with the brand, consumers and followers stayed online until they could get the clothing they wanted.

How could your brand apply this same idea, generally, to drive loyalty?

The idea of Influencer Marketing isn’t only reserved for fashion and beauty. By selecting an influencer who reflects the brand’s values, any brand can leverage Influencer Marketing to drive customer loyalty.

Are they any products you buy based on influencers you follow on social media? Leave a comment below.

The Debate on Customer Loyalty and the Future of Points

The Great Customer Loyalty Points Debate

If you have pondered the future (and potential extinction) of points-based customer loyalty programs, it’s worth taking note of a debate that briefly raged at a Loyalty Academy Conference hosted by The Wise Marketer.

Loyalty Academy, a newer entry to the loyalty space, is an annual confab of loyalty practitioners from 16 countries gathering to share best practices and discuss the future of customer retention and engagement. This year’s event also proved to be the perfect forum for an Oxford-style debate that posed a question on many loyalty marketers’ minds:

Are points-based loyalty programs still necessary to build customer loyalty and foster profitable behavior change?

This is far from an academic question. Many brands today that are considering a new program are not automatically assuming they need a proprietary loyalty currency. And some with legacy programs are evaluating the place points will play in the future. In February Coca Cola put this question in the spotlight when it announced a decision to sunset the point-based aspect of their long-running “My Coke Rewards” program to focus instead on more experience-based offerings.

The Debate Begins

The Loyalty Academy discussion on points pitted Nicole Harris of Maritz (pro) against Phil Rubin of rDialogue (con), each of whom had agreed to represent a particular viewpoint for the purpose of the debate. Rubin opened with the argument that traditional points-based loyalty programs no longer fully meet the needs of the customers they were created to entice. He also noted that their value as the primary tool of loyalty marketers has diminished as the market has shifted focus more toward optimizing emotional connection and customer experience.

Harris came at her pro-points argument from a strong human sciences perspective. She cited how a program currency can enable a brand to leverage both medium maximization theory and goal gradient hypothesis to engage customers. She went on to note that points programs also allow you to engage the social brain, as consumers will often publicly discuss how many points or miles they have earned in your program, even though they’d never discuss how much money they have in the bank.

From the perspective of the Multi-Loyalty Framework, Rubin essentially argued that Mercenary Loyalty is less effective than it once was, and that brands need to be more social and programs need to be more engaging – thus moving towards True and Cult Loyalty. This is a hard case to refute – brands cannot rely any longer on mercenary loyalty alone.

After the Dust Settled

So what conclusions can we draw from this debate? While Rubin made a salient point about points, it is also true that points remain an incredibly useful tool to direct and influence humans to behave in a specific way. In any human endeavor, including marketing programs, the brain needs some system to hook into and to commit to. Points are great for that — they give consumers a framework for understanding expectations, a game to master and to beat, and a means to track progress toward goals. Are points the only way to do this? No, certainly not. But, in the loyalty space at least, they are the most proven approach of this kind to drive behavior.

While a hand vote at the end of the debate gave a decisive win in favor of the pro-points argument, a savvy loyalty marketer would tell you that both points and experiences are essential in any loyalty program offering. Rick Ferguson, CEO of The Wise Marketer, summed up the debate saying: “(Harris) and Rubin agreed that essentially both sides were right. Points programs are still a valuable tool, but (the) argument that points alone are no longer sufficient to win true brand loyalty resonated with the audience.”