If you were to take out your phone or wallet right now, chances are you have at least one loyalty rewards program app or card in the bunch. We all have brands we’re loyal to, and the best of them are wise enough to reward that loyalty with discounts, free shipping, one-day promos, points we can cash in for stuff, and the like.
Loyalty creates a golden loop of sorts for brands—it drives reliable revenue from repeat customers while also diverting their spend away from the competition.
What’s more, companies like Amazon and Apple know that loyalty is a powerful revenue-driver when releasing new products. If you love your iPhone, you’ll consider an iPad. If you’re delighted with Amazon Prime, you’ll consider Fire TV first when in-market for an over-the-top streaming box.
This is known in marketing as the “halo effect,” and it’s one of the drivers behind the success of Amazon and Apple, which have wandered far away from their original core offerings. Satisfy time and time again in one area, and you’ll have saved up enough of the customer’s loyalty currency to spend on expansion into new sectors.
In this article, we’ll explore a few easy ways brands can increase customer loyalty and answer a common question: why doesn’t Amazon have a loyalty rewards program?
Easy Steps to Customer Loyalty
Loyalty flows both ways. Customers receive it from brands as well as spend on them.
Harvard Business Review tells us that the cost to acquire a new customer is five to 25 times higher than keeping a current one, and that increasing retention rates by just 5 percent increases profits by 25 to 95 percent. Little things that don’t cost a company much can go far toward rewarding a customer for her business.
A great place to start is with the time currency. A dedicated line at a check-in/checkout counter for loyalty program members, for example, sends a clear message of value. I absolutely love this at the airline, hotel, and rental car programs I’ve joined.
Other perks like free downloads and birthday discounts are also inexpensive ways to say thanks and build up that loyalty level, which you’re going to need as an insurance policy the next time you screw up (and you will).
That love generates dopamine, and as I associate that happiness with the brand, I’m much more likely to return so I can get my fix of “pleasure chemicals.” Instead of paying enormous sums to acquire new customers, companies should issue these little love notes to keep the ones they have and increase their base through word of mouth.
However, keep in mind that efforts to increase loyalty are only effective after you’ve invested heavily in customer service, a.k.a., “the new marketing.” If you’re not listening to your customers and tending to their needs, I can promise you they’re on the way out the door (and telling friends on the way).
Why Doesn’t Amazon Have a Loyalty Program?
Amazon doesn’t have a loyalty rewards program, yet most people aren’t surprised when it routinely tops brand loyalty surveys. How does that happen?
When I first started working at Amazon, I wanted to know the answer, so I asked my boss why Amazon doesn’t have one.
His succinct response: “Because Amazon is a loyalty program.”
In other words, the company’s leadership principles, goals, programs, customer service in all its forms, and a total commitment to fulfilling promises is what it takes, not necessarily miles or points. Those help, sure, but you can’t buy your way to the top of the loyalty mountain if basecamp is a dumpster fire.
That speaks to why, inside Amazon, landing the number one spot on a brand equity or trust survey was rarely observed or even discussed. When every conversation, every hire, every action is done on behalf of the customer, then only total success is the expectation.
I saw this akin to Hall of Fame Detroit Lions running back Barry Sanders, who calmly handed the ball to the referee after scoring one of his 1,991 touchdowns and never, ever celebrated. Hold aggressively high intentions for your performance and, once they’re fulfilled, act like you’ve been there before. Move on to the next TD.
What’s It All Mean to You?
Customer loyalty takes years to build and a moment to lose. Consumers have so much choice in today’s marketplace where every player jockeys hard for their dollar.
Despite what many brand owners believe, customers have every right to be promiscuous and don’t owe you a second chance. You have to earn forgiveness in the currency of loyalty well before you let them down.
Where you work, is the customer experience the first thing on the meeting agenda, or does it start with the bottom line and pleasing shareholders? Is loyalty a “first dollar in” notion or does it sit somewhere behind legal and lobbying?
Try this: listen closely to the verb tenses people use when discussing priorities. Is it past (reactive) or future (proactive) tense?
Next, listen for the pronouns your colleagues use in important business discussions. Are they first-person plural (“we,” inward, self-obsessed) or third-person plural (“they,” outward, customer-obsessed)?
The verbal cues you pick up in meetings will give you an idea of where your brand stands with respect to your customer—and just how far its owners have to go before it earns “brain bookmark” status.
For more perspective on customer loyalty, you can find the book Brand Currency: A Former Amazon Exec on Money, Information, Loyalty, and Time at Amazon.