Recent reports state that in order to drive customer loyalty, brands must have a loyalty program in place. I disagree!
Don’t get me wrong, I think some loyalty programs are fantastic. As long as they have a clear purpose, a strong strategy behind them and deliver value to both the customer and the brand, loyalty programs can be highly effective.
However, there are many brands who don’t have a loyalty program, yet still drive loyalty. These brands are still marketing directly to their customers. They’re still putting a program of communications in place to influence and change customer behaviour.
Loyalty program or customer program? – Things to consider
Many loyalty programs out there are really ineffective. They are not thinking or delivering on what’s best for the customer, they’re not supported by the business, so they fail. There’s plenty of things in the value scale for customers, it’s a case of finding the ones that make sense to the different types of customers for the brand.
A big challenge for a lot of programs is that many of them are geared to actually not reward the customers who are most loyal. They’re used as a hook to get people in and then you actually get less benefits the longer you are loyal to the brand, which essentially defeats the purpose.
If you are considering a loyalty program for your brand, firstly you need to consider how the loyalty program would fit into your existing customer program. Other factors to consider include:
Resources – you’ll need to dedicate vast amounts of time to successfully launch a loyalty program – from market research through to implementation. You’ll also need budget to build the program, and to effectively market it.
Lack of internal buy-in – everyone across the business must be supportive and understand the value of the program. This can be particularly challenging across franchise networks, as franchisees may see a loyalty program as “just giving away discounts to customers who were going to buy from us anyway”. It’s important that franchisees have a consistent GTM message to ensure maximum effectiveness for the brand.
Strategy and Infrastructure – when you start to consider a loyalty program for your business, one of your first thoughts may be “we need an app”. Having an app is not a necessity for a loyalty program, you will need to have some form of infrastructure to support and deliver the program, so that customers can identify themselves – and something which doesn’t add too much congestion at the point of sale. You also need a strategy to feed into the program, they don’t run by themselves – they need attention and ongoing evaluation to ensure they are meeting the customer and business needs.
Thriving without a loyalty program
Ranked the world’s most valuable brand in 2019¹, with arguably the world’s most loyal customers behind them, Apple have achieved phenomenal success – all without a customer loyalty program.
Apple has, however, been very innovative in the way they drive customer loyalty. Apple continuously innovate for their customers who want to own the latest, shiny piece of tech. These customers are guaranteed to buy a new product (and its expensive accessories) as soon as it hits the market. Customers even go as far as camping outside of the store to ensure they will be one of the first in the door. Then there is the cloud storage platform, iCloud, which essentially locks customers in, making it difficult for them to leave, as they would lose access to all of their personal content. Finally, Apple’s Genius bar, which is in fact, a genius initiative – adds value to customers by offering free support and start-up sessions to demonstrate how they can make the most of their new product. It’s also a place to go if something goes wrong.
How to drive growth without a loyalty program
Recognise the customer
Customers want to feel individually appreciated, and valued. Think of ways in which you can add value – across the entire journey. This may be as simple as knowledgeable staff members explaining/demonstrating products and offering tips and advice to help the customer. Empathise with the customer, be responsive, support them every way you possibly can.
Use data to personalise
Data is vital. The more times a customer shops with you, the more data you are able to collect, helping you to get to know the customer better. This enables you to anticipate their future needs and continue the conversation with the customer – putting them on a path to re-purchase.
Focus on the customer experience
Customers are time poor, they expect made-to-measure experiences, and they expect them in real-time, on the go. Customer experience is now seen as the new battleground. Customers today have endless choices, if they receive a poor experience it’s easy for them to switch brands – and for them to tell others. Deliver an outstanding customer experience and they won’t have a reason to look elsewhere.
Have a strategic communications strategy in place
Just because you have a customer’s email address or phone number does not mean you can abuse it by sending out irrelevant messages whenever you feel like it. Customers are people, not numbers on a mailing list. Remember, one button (the dreaded unsubscribe) can lose you that customer forever, no second chances. Only contact the customer when you have something relevant to say, this will dramatically increase the success of your engagement.
Give them a reason to come back to you
Many brands offer incentives to drive customers back into the store. We recently shared a story about Walgreen’s ‘get a shot, give a shot’ program. This incredible initiative brought customers back into stores (increasing sales by 500%), while offering their customers the opportunity to help a child in need. Think of a valid and beneficial reason for the customer to return to your store.
Consider the customer lifetime value
You need to look beyond today’s sales, and think about the long-term value of the customer. It costs 10x to acquire a new customer, than it does to retain an existing customer. Determine the value of the customer, and invest in ways to keep them happy. We suggest dedicating at least 10% of your marketing budget to activities which keep existing customers happy, whilst driving them back in-store or online.
Essentially, customer loyalty comes down to having strong relationships with your customers, knowing and understanding who they are. Anticipating their needs, wants, desires and keeping communications relevant and timely. A loyalty program could enhance the relationship, however it’s not a mandatory requirement to drive loyalty.
Data is the key to customer growth – not an app, or the latest tech. Capitalize on the data you already have, and grow from there, each transaction brings you a little closer to the customer. Only by having this depth of customer knowledge will you be able to truly personalise their experiences with your brand. Recognise the customer, and where they are in the customer lifecycle – continue the conversation with each customer, don’t have the same conversation with all of them.
My favorite example of a loyalty program mistake is the hotel chain that routinely kicked me out of their surveys when I told them that I was over 60. Perhaps this wasn’t the real reason, but the consistency of this action certainly had me believe that it was.