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.


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.