Call me needy, but I’m looking for an upgrade when it comes to customer loyalty. I’m not looking for it to just be prettier or faster and I don’t need it to be on an app. I’m not even unhappy with the current loyalty programs I’m enrolled in. To be honest, I’m a little detached from them and their offerings. I’m not fully active on most and only really signed up for the offer that was on offer that day. You could say I’m looking for love, not like, when it comes to committing to brands. So now I’ve saved all my points up and I am ready take the next step in loyalty, and I’m ready for brands who are going to give me that meaningful, long-lasting, sweep me off my feet kind of feeling.
Consumers are starting to understand the value we provide to brands, and for many it’s an empowering feeling. There has been a shift from big brands putting their KPI’s first in the equation to a new customer-centric era, where fewer consumers chase after products or deals but instead now question and challenge companies. What are your brand ethics? What is your image in the media? Do your values align with mine? Because if not, I can walk away and find someone who is a match with me. Saturation and competition across markets has destabilised the definition of a loyal customer. Brands could once rely on the consistency of repeat customers, now the extent of choice online and in store can leave consumers dizzy or fickle. Loyalty schemes that first emerged with points based rewards systems found success by incentivising customers to keep returning and building on their purchase progress.
Fewer consumers chase after products or deals but instead now question and challenge companies
These were Customer Loyalty Schemes: The Origins; points for prizes to people who visited more and bought more. With every repeat purchase points would accumulate and discounts could be earnt on weekly shops or ‘treat yourself’ moments. The upgrade to this came when brands and stores delved into the analysis around spending habits and tendencies, segmenting their audiences and guessing where they’d want their next discount. Companies used customer data to heighten their interests through email campaigns, leaflets through the door and binders full of vouchers. “Because we’ve noticed you tend to buy a bottle of white wine when also buying a tub of ice cream, we thought you might be interested in our 2-4-1 offer on all chocolate bars in store from Monday!” Yes, it provides a more personalised touch which is effective to a point, but this type of system is heavily reliant on a transactional style relationship. Give us your personal data and we’ll let you know if we’re doing anything you might be interested in. Please have these vouchers offering discounts when you’ve already paid, that you can only redeem in store by tomorrow. Hearing about offers is helpful, albeit overwhelming for our inboxes, but crucially the reward is not as fulfilling. Which is why many customers are tuning out and activity on programs is diminishing. In fact more than just tuning out, members are finding programs aren’t providing the value promised, as studies into customer responses to loyalty programs reveal that up to 90% of social media sentiment on loyalty schemes was negative.
The issue may lie in the age-old question of “what am I getting out of this relationship?”. At a time of cyber security and data protection sensitivities, consumers are handing over personal information in the hope the exchange will bring them a step closer to fulfilling their needs and aspirations. These psychological needs respond to the chance to elevate their status or recognition within the brand’s community (Gold/Silver Member), or receiving a chance to gain exclusive access to an event before everyone else for instance. As customers realise the value they bring to a brand, they are also realising the deeper, intrinsic value they can get from a brand. We all have instincts that make us respond to different motivators, pushing our individual buttons, and brands can maximise interest levels in their offerings by leveraging these motivators. And they make the foundations for a new generation of customer loyalty and engagement.
It’s been baptised with various terms, but the ideas and drives behind it are the same. Real, tangible loyalty today is the result of mutually beneficial, sustainable relationships connecting consumers and brands. Whether it’s the world of customer loyalty or my dating life, Tinder Dave will never be considered for a second date if he spent the first pontificating about his protein shakes and never asks about my interests. A customer will support you if you connect with them and give them back value. Strong loyalty schemes are personalised, engaging experiences that don’t settle for simply signing people up. This upgrade to loyalty schemes requires the effort to drive participation within the program, preventing boredom, detachment and inactive users that drastically affect your success measurements. Current loyalty schemes need to be able to foster new, genuine relationships as well as nurture, maintain and grow established relationships, sparking a deep appreciation, admiration and advocacy for the brand and the experience it offers.
There is immense value to be found in customer behaviour that does not solely focus on customer purchases.
It is making this connection that many loyalty schemes miss out on: making customers loyal to the brand itself, instead of loyal to specific discounts or rewards offered which are fleeting. Customers want to feel empowered and enriched by their interactions with a brand, hopeful that their collaboration has brought meaning to both parties. There is immense value to be found in customer behaviour that does not solely focus on customer purchases. Why should a customer settle for a scheme that only sees them as a walking wallet? It is when brands place greater weight in purchases that dissonance is created between a company’s value proposition and the actual customer experience. Brands that can tap into the psychological and behavioural triggers that provoke a response in their audiences, will drive higher levels of participation, sales and customer satisfaction in their loyalty schemes. As well as strengthening and consolidating a longer lasting relationship.
While the task of engaging with the masses can feel immense, there are accessible steps that can be implemented to facilitate progress. For instance, by applying well-designed Gamification techniques the effects of the core loyalty experience can be dramatically amplified. Because of the motivational mechanics and dynamics behind Gamification, the interactions between brand and customer are enhanced as they speak to what drives the audience.
It is also important to set clear goals and conditions, which requires efficient communication with your audience. Consistent and well defined communication helps to set expectations for customers, letting them know what is special and exclusive about your relationship, or program. If they commit to your loyalty scheme, what value can they alone look forward to receiving. Offering a redeemable voucher as a birthday present for customers is an effective personalised interaction, but the effect is lost if the customer then realises in store they still have hoops to jump or the offer is actually widely available.
With this upgrade, existing loyalty schemes do not become obsolete. They were in fact the important learning curve that brought brands closer to better understanding the motivations behind their customer’s actions. Loyalty: The Next Generation still builds on points for prizes, analytics and segmentation, but now adapts the program to suit the needs of the customer and keep them continuously engaged and active with more curated offerings. Rather than pushing customers to the tills, the upgrade is about recognising what makes the customer smile and what motivators will lead them to desired behaviours. All in all, allowing brands to nurture the benefits of sustainable, valuable interactions, while also leaving customers advocating for the enriching experience provided by the loyalty scheme. Now, if only dating had the same kind of success rate.
