Customers become “brand partners” when companies shift from treating them as transactions to creating addictive experiences which meet and exceed customer’s needs.
Following are important findings from a new study on loyalty conducted by the Direct Marketing Association and Forrester Research analyst Tina Moffet:
- 58% of marketers were dissatisfied with their loyalty programs. And according to Moffet, that’s due to a majority still in an “earn and burn mentality.”
- 52% of marketers find it hard to understand customers across touch points.
- Marketers also noted that personalizing offers, content, and experiences based on behavior is a “big challenge.”
Lululemon Creates “Addictive” Experiences
Yoga apparel retailer Lululemon Athletica not only has a legion of loyal brand ambassadors but, its customers have taken things one step further, by creating a host of blogs and communities of self-identified brand “addicts.”
The company, whose products seldom go on sale, has incorporated its merchandise and culture into customer’s yoga lifestyles at a very deep level. From its bricks and mortar stores, social, web, apps, events, and community causes, the company actively presents consumers with numerous ways to become a part of their own brand experience. In addition to their actual product offerings, the company provides in-store and local yoga classes, on-line education and resources to get involved in everything from retreats to what the company calls its “Metta Movement,” a grassroots community philanthropy program.
Their strategy is resonating with consumers, with the company recently reporting that net revenue for the quarter increased 10%. Laurent Potdevin, Lululemon’s CEO, stated: “Our team’s solid performance resulted in another improving quarter – coming in ahead of our revenue expectations. We drove positive trends in traffic, conversion, and brand engagement.”
Walgreens Becomes Part of the Healthcare Experience
According to Adam Pellegrini, Walgreens’s vice president for digital health, “We want people to come in and do more than just pick up their prescription or some milk, but really have part of their healthcare experience within that location.”
Pellegrini continues, “…part of our digital health approach is to focus on delivering that experience on customers’ terms… They should be able to pick up their smart phone, open up the Walgreen’s mobile app, and talk to a local provider via our telemedicine experience… Walgreens will be a member of our customers’ virtual care team…”
This strategy is confirmed by CMO, Sona Chawla, “Our mission was to think about what customers were doing and how we could improve it…. We think about advertising as storytelling for our brand. It’s part of the Walgreens experience, not something separate. Our advertising needs to be connected all the way through the customer journey, not just at the start… We use a very customer-centric lens to move from just managing channels to get to a place where we are leveraging everything we have to deliver, and delivering the right message to the right customer at the right time, through the right channel…. It helps build customer loyalty and spreads the message of who we are and what we care about. Ultimately, it’s about these connected brand experiences that tell the story. Advertising is just a part of that.”
The company’s Balance Rewards program has 82 million members.
3 TakeAways
1. Develop a culture of “brand partners” by changing your focus from transactions to truly memorable customer experiences.
2. Create easily accessible ways for customers and prospects to get involved and incorporate the brand into their lifestyle.
3. Create reasons for customers and prospects to engage with you across every element of the mix, including web, bricks and mortar, apps and social.
If you provide exceptional value, consumers will be motivated to actively seek out your company because they will be rewarded with deeply relevant experiences.
This is a valuable post, and it emphasizes the many benefits of generating branded, differentiated, positive customer experiences. As noted, Walgreens’ Balance Rewards loyalty program has done a great job here. Their Steps initiative gives extra points for setting a healthy goal, linking a digital fitness device, miles logged on walks and runs, tracking weight, and checking in at physical activities like yoga or spin classes.
Effective loyalty programs are opportunities to deepen relationships with customers, generate more of an emotional/bonded connection, and provide more value for customers through experiences. I’ve covered this in a recent webinar: http://beyondphilosophy.com/webinars/how-to-design-build-an-effective-loyalty-program/
Thanks for your feedback Michael.
The metrics regarding the performance of loyalty programs which deliver competitively differentiating and high-quality experiences are impressive.
Key metrics indicate double and triple digit increases in visits, spending, bringing friends, social engagement and rewards redemption rates.
Ernan: the Walgreen’s story you described appears well-intentioned. I like that the company has considered ways to provide customers opportunities to engage, and hasn’t attempted to muscle its way into places that it doesn’t belong.
Not every company behaves that way. One CRM vendor I will not mention shared a “case study” in which a customer of a major consumer packaged goods (CPG) company (a client of the CRM vendor) made a prosaic purchase. The CPG company made this routine transaction into a major event, complete with selfies, personalized electronic end-cap displays, online postings, etc.
I found the whole example horrible and overbaked. Fried beyond a crisp, in fact. My reaction might be a generational issue – younger consumers don’t object to indiscriminate social media sharing as much as I do. The point is, if you’re a marketer bent on creating “addictive experiences,” start with empathy for customers, and make sure that what you do has palpable value, and not hollow, self-serving gimmickry.
Thanks for your comment Andrew.
Truly engaging and competitively differentiating customer experienced must have authenticity, integrity and value.
Findings from our recent VoC research across all generations, indicate that people are increasingly attuned to marketing ploys which are clearly inauthentic or contrived. The price companies pay for these customer manipulations is becoming increasingly severe.