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In the back of our minds, we all know that loyalty programs were originally designed to drive the next purchase. They gamified transactional behavior, making repeat purchases more fun. Today, we understand that building long, loyal relationships with customers involves creating a value exchange based on empathy and emotional drivers. In order to be successful, there needs to be participation from both parties—the brand and the customer. The team at Iris Concise calls this participation loyalty. The key to successful participation loyalty is aligning the proposition of the loyalty program to the overall brand. In this way the program becomes an extension of the brand, actually enhancing it.
We sat down with Phil Hussey, CEO of Iris Concise, to learn more about participation loyalty and how it drives long term success for today’s top brands.
How has customer loyalty changed over the last few years and what is the biggest challenge that your clients face in driving deeper customer loyalty?
Loyalty programs have been commoditized over the years, with the majority offering simple and uninspiring reward schemes. Most marketers that we talk to are struggling with how compelling their loyalty program is from a consumer standpoint, and how beneficial it is from a business standpoint. Simply having a loyalty program is no longer enough. We find that the best programs focus on creating a deeper connection between the consumer and their brand. This insight came from a larger piece of research that Iris did recently called The Participation Brand Index. It was a global study of nearly 20,000 consumers, and it researched over 200 brands on a number of different attributes. Five key pillars of customer participation emerged from the study, and the brands scoring high on the PBI command a premium, drive advocacy, and are seen as leaders.
Can you talk about participation loyalty as a new approach for brands?
It’s a fresh, customer-centric approach to designing a meaningful program designed to drive both member engagement and purchases, forging an emotional connection to the brand and, ultimately, advocacy. The key is aligning the proposition of the loyalty program to the overall brand. In this way the program becomes an extension of the brand and actually enhances it. We’ve built a process to drive the necessary innovation, including customer validation.
What are the key elements that go into a successful participation loyalty strategy?
Our brand participation study revealed that the leading brands scored very highly on one or more of five key pillars:
Passionate Purpose—More than just a position in the sector or a point of view on the world, a driving force behind all brand behavior that gives everything you do an authentic passion, purpose, and potency.
Culture Shaping—Not simply passively following culture, but bringing something genuinely fresh to people’s lives, passions, and conversations to help the brand feel hot right now.
Category Innovating—Actively enhancing consumer participation in the sector by offering something more interesting, exciting, and relevant to the experience of browsing and buying.
People Powered—Building brands with people, not for them. Leveraging one audience’s participation to drive interest and affinity amongst others.
Distinctive Character—A truly distinctive character allows people to quickly, instinctively recognize and feel affinity for a brand at every interaction. The most powerful are multi-faceted, provocative, and reinforced simply through body language and iconography.
The great thing about this is that there are a number of different routes to take, and we generally find a natural fit for a given brand right away. For example, some brands might be all about technology innovation, and so their loyalty program should take that to the next level. Others might be about their distinctive character or flair, and the loyalty program should accentuate that aspect even more.
How do brands cultivate a passionate purpose?
In the best case, this will tie back to the brand’s overall passionate purpose. For example, a nonprofit might be all about helping others who have endured a natural disaster. Or a fashion brand might be all about achieving a distinctive look. The loyalty program needs to tap into that purpose, and through the unique experience and data collection enabled, take it to the next level in a creative way. The Jeep Wave loyalty program is a great example of a program that taps into the Jeep owners’ natural love for the outdoors lifestyle and the benefits and experiences members receive further that proposition. It certainly is possible to create a new aspect to a brand proposition with the loyalty program as well. National Emerald transformed the mundane car-rental industry by harnessing technology and allowing people to move through their ecosystem locally. Similarly, many athleisure brands have begun moving into experiential marketing as well, oftentimes hosting branded yoga classes or 5K races.
How does unique community building and direct customer experiences drive business value?
We see that community is one of the strongest pillars when it comes to business value, because it knits the members together in a way that far surpasses enjoying discounts or perks. In this case it becomes a shared lifestyle interest. With a brand that is purchased infrequently, a community will maintain engagement and keep the brand top of mind between purchases. Secondly, community becomes a powerful engine to drive customer acquisition through referrals. The Team Messi community, at 15-million strong and tremendous daily interactions, is a great example of the power of this pillar.
How do brands shape their users’ culture?
It certainly is lofty when a brand ascends to becoming a cultural influence, such as Patagonia in the area of outdoor living and sustainability, or a brand like Samsung that drives gamer culture among younger mobile users. The key aspect that a loyalty program can provide is the unique opportunity afforded by data collection and the ability to personalize the experience based on the member characteristics. This can make the brand feel super relevant and on point in driving new cultural dimensions.
How important is personalization?
The importance of personalization cannot be overstated. The worst thing a branch can do is create a compelling loyalty proposition, but then fail to bring it to life for an individual member. Of course, there are also parables to personalization in terms of overcomplicating it and failing to move ahead in small steps. The best approach will entail increasing levels of personalization over time on a three-year roadmap.
How important is innovation to participation brands?
There are a wide range of ways that a loyalty program can bring innovation to bear on their value proposition. On this pillar more than any other, the loyalty program can diverge a bit from the core brand in that the loyalty program can become the nexus for innovation. Hertz and Starbucks are great examples of this, with the improvements to the customer experience they have achieved and how they are always raising the bar.
Can you talk about return on involvement?
Our Participation Brand study revealed that brands with a higher overall participation index achieved stellar performance on a range of different metrics. The stronger a brand scores on the Participation Brand Index, the higher their NPS. Every eight points achieved on the Participation Brand Index is worth a one-point increase in NPS. Brands who lead in the Participation Brand Index are seen as leaders in their categories—and this relationship is reflected across all brands in the study. The higher a brand’s score, the greater associations of leadership, and the more consumers are willing to pay for that brand. This is important because it establishes a direct tie between involvement and performance.
How do brands connect emotionally with their customers?
This ties together everything that we’ve been talking about. Consumers will only actively participate in brands they feel an emotional connection to. They will only advocate for brands that they really care about. This is all about creating an emotional connection to the brand by satisfying a basic need like community, purpose, character, and the like. We see participation loyalty as a very actionable and pragmatic way to create that emotional connection, which can be very elusive in the abstract.
For what types of brands can Iris Worldwide help create a participation loyalty program?
Every loyalty marketer we’ve ever talked to has wanted to make improvements to their program, so brands with loyalty programs they want to improve are a great fit. But there are many brands that have been wary of loyalty programs, and we feel that this framework overcomes many of the business concerns about discounts and points liabilities and provides an opportunity to start off on the right foot.
How does a brand interested in participation loyalty partner with Iris Concise?
We have developed a standard process to design a participation loyalty program, and we tailor that to each client’s particular need. A great place to start is our participation loyalty survey assessment, which can take the pulse of customers and provide some initial insight into the current participation index and areas of opportunity.
For more information contact, Bill Finaldi at [email protected]
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