This lesson was amplified in a recent story in Entrepreneur, which points out that despite the prevalence of loyalty program membership (2.65 billion in the U.S. alone, according to COLLOQUY), few are managing to accomplish what they set out to do. Seventy-seven percent of loyalty programs that focus on awards alone fail within the first two years, Pete Maulik, managing partner at the consultancy firm Fahrenheit 212, wrote in the piece.
The root of this problem, according to Maulik, is too many operators overlook the difference between human and corporate loyalty: “… the corporate interpretation of loyalty bears almost no resemblance to the well understood – and highly aspirational – feeling that people everywhere have for their friends, family, God, country, football team and dog.”
Until a brand introduces elements of human loyalty into the corporate loyalty model, he concluded, it will not develop a sense of brand affinity among consumers.
I generally agree – programs, beyond being transactional, need to connect emotionally. If organizations only think of loyalty in the form of a program, then they overlook the long-term goal, which is to attain an emotional connection between the customer and the brand. This connection is what cultivates loyalty and ensures that the customer will continue to frequent that brand, even in the face of meaningful competitive alternatives.
Part of doing this involves loyalty program design and approach, but it also requires that the program operator think contextually about its customers and how they use the brand’s product and services. When an organization successfully uses its data to personalize the customer experience, it stands a better chance of connecting with that customer at a deeper, more complex level.
In his article, Maulik implies that rewards may be the root of evil, but there’s no question that in today’s hyper-competitive environment, marketers need to consider a number of short- and long-term consumer motivators as part of their engagement strategy.
Whether it is pricing, sales strategy, promotional programs or your basic loyalty approach (points or benefits based), these motivators should fit the desired brand experience. In fact, they should reinforce and enhance that position, rather than simply act as a me-too strategy driven by the presence of loyalty programs among competitors.
The loyalty operators we will read about in the next decade are those that will give their ambitions the opportunity to explore the full spectrum of customer engagement tools – either self created or at their disposal. For those who aspire to be among them – whatever you do, don’t forget that capturing customer information can only enhance your opportunity to be a better, more relevant marketer. That is the most direct path to emotional loyalty.
