Loyalty360’s Thursday webinar, Stuck in a Cycle of Endless Discounting? Five Approaches to Brand Loyalty, presented by Bond Brand Loyalty turned the notion of offering discounts to establish brand loyalty completely around.
The webinar was facilitated by the Bond Brand Loyalty team of Scott Robinson, Senior Director, Loyalty Consulting & Solutions, Richard Schenker, Senior Loyalty Consulting Director, and Sean Claessen, VP, Creative and Strategy. All three have worked consistently with brands to move away from traditional discount platforms, and have garnered excellent results.
“It’s time to break the endless cycle of discounting,” Robinson told participants, referring to the recent Black Friday and Cyber Monday events when discounts and deals were everywhere. “The loyalty market is fiercely competitive, but brands that try to keep customers loyal through discounts often see erosion of business and the profit margin.”
All Marketing is Loyalty Marketing
Robinson said that all marketing initiatives, if done well, can enhance customer loyalty. Through its work with clients including Johnson & Johnson, Under Armour and Blackberry, Bond Brand Loyalty shared three critical, customer considerations.
First, Robinson said, is that we’re here to “make the world a more loyal place.” This is because customers expect more and brands need to move beyond points, discounts and offers to differentiate themselves from competitors.
“We’ve learned we can’t shout each other out,” he said.
Second, the team said that marketers must keep some repetitive behaviors happening. Customers like consistency – and this keeps them coming back.
And, third, customers who love a brand become its best advocate.
These three points can help drive loyalty much more than discounts. While brands may see an increase customers and revenue initially with discounts, over time the margin changes and eventually the effect can be negative.
“Customers need change,” explained Claessen. And discount offers don’t always line up with the brand’s value proposition, causing confusion and disjointed messaging.
Alternative Approaches to Discounting
Bond Brand Loyalty has come up with five approaches to loyalty that has proven more successful in the long run for marketers than offering discounts.
Four Drivers of Engagement
The team uses Harvard School of Business model that explains the science of motivation. People are driven by four desires: to acquire, create, bond, and to defend. Bond Brand suggests customizing messaging and design around this framework to motivate customers.
Brand Alignment
When brands keep their promise to customers by staying true to their mission and vision, customers respond positively. Bond Brand Loyalty works closely with clients to tailor marketing programs to keep them consistently aligned. Its one of the most cost-effective ways to build customer loyalty, the team said.
Customer Analytics
If discount strategies are going to work, they will work best if only offered to a segment of buyer – not all, said Schenker. “Its no longer one-size-fits-all,” he said. “The best companies are using real customer insights to target the right customer to get results.”
Relevance
Marketing campaigns must be relevant to be successful, the team said, giving the example of how browsing the aisles of Amazon results in specific retail/buying suggestions based on the behavior.
Science Based Design
Framing and contextualizing messaging and design is another cost-effective way to motivate and the customer and establish brand loyalty.