For a moment, put on your “customer” hat. What brands have earned your loyalty, and why? Several reasons may come to mind: They are trustworthy, reliable; they understand you, or they care about your needs. When you consider what loyalty means to you, it’s unlikely that the first thing that comes to mind is a promotion or a loyalty program.
Of course, discounts and offers are important tools in fostering loyalty, but what really connects customers to brands is an emotional bond. It’s how customers feel about the brand experiences they are participating in. And that bond is strengthened over time through a relationship based on trust that endures through consistent personalization and this emotional connection.
The Changing Definition and Role of Loyalty
To deliver the best experiences, think about loyalty from your customer’s perspective. Loyalty is an emotional bond experienced by the customer across every interaction with your brand. This means you must move away from loyalty as an isolated marketing program focused on points and promotions delivered across a narrow set of channels. All the best practices of loyalty programs still apply, but loyalty should be woven throughout the individual moments that form the entire experience and ultimately drive lasting relationships.
This shift in thinking is really important because loyalty is a brand’s most valuable resource, and it takes a lot to earn and maintain. Today’s customers evaluate relationships with brands through four lenses: 1) experience, where needs are met proactively in the moment; 2) connection, which goes beyond price and promotion, becoming more emotionally charged over time; 3) innovation, where the service, product, and brand experience enhances customers’ lifestyles; and 4) society, where a brand represents customers’ values by taking an active role in helping society through equality and sustainability.
Thinking of loyalty as an emotional bond means that brands need to deliver on each of these aspects for individual customers. At each step in the relationship, brands must provide carefully curated moments of value that are contextually relevant and fit seamlessly into a customer’s lifestyle. The outcome is a more meaningful connection between brand and consumer that forges enduring loyalty and increased lifetime value.
The Fundamental Role of Identity in Fostering Loyalty
Of course, the four lenses – experience, connection, innovation, and society – are perceived differently by different customers across ages, demographics, and preferences. So, providing this kind of loyalty experience means moving away from segment-based marketing and toward true, one-to-one personalized marketing. This creates a fundamental need for brands to solve for customer identity.
Really knowing who your customers are and what they want involves creating an identity graph that goes beyond collecting terrestrial, device, and identity data signals. Loyalty solutions enrich customer identity efforts by incentivizing data sharing at the individual level – using branded experiences to collect data signals on consumer attitudes, behaviors, lifestyle, and engagement. This is an effective way of collecting valuable first-, third-, and even zero-party data.
Identity also plays an important role in enabling brands to develop more engaging and relevant loyalty experiences. This creates a reciprocal relationship in which loyalty feeds and enhances identity and vice versa.
Three Ways To Power 1:1 Marketing With Loyalty
Let’s look at three ways to use loyalty solutions to accelerate an identity-centered marketing strategy:
1. Promotions fuel first-party data at scale: Promotional activations can be leveraged at every phase of the customer journey to meet specific marketing objectives, including discovery, purchase, retention, and advocacy.
By offering an incentive-based call to action, targeted promotions can yield 40 percent registration rates, which fuels accurate identity at scale, helping to enrich consumer profiles and secure permission for ongoing marketing and CRM activities.
2. Engagement hubs deepen identity: As a type of extended-play promotion, engagement hubs can enhance private identity graphs with behavioral and engagement insights gathered through a content-based experience. Engagement hubs provide unique opportunities to harvest and enrich data and enable brands to activate consumer behavioral data to drive personalized follow-up messaging and conversion.
Engagement hubs can create 8 to 12 minutes of brand engagement in an authenticated content platform over a sustained period of time, enabling the collection of zero-party preference and sentiment data. Activities can include gamification experiences, code entry, answering trivia questions and polls, watching a video, sharing content socially, and more.
3. Loyalty creates a connected brand experience: To create a sustainable bond with consumers, loyalty programs should be “always-on” and present at every interaction, creating a connective thread throughout the entire customer experience.
Over the past year, there was a 6 percent increase in consumers who said it was important for brands to recognize them based on past visits. Loyalty programs can help brands anticipate consumer needs and deliver more frequent and relevant interactions across all channels, building emotional bonds that increase the impact of cross-sell and upsell efforts.
Get Going With An Integrated Loyalty Strategy
A brand’s stage of loyalty maturity varies depending on the industry and organizational structure. For more traditional brands, like CPGs, loyalty efforts often operate separately from other marketing and customer experience efforts. They may be more narrowly focused on certain channels and promotional experiences, focusing on a specific point in the customer lifecycle.
But it’s not uncommon for newer, digital-first brands to be thinking about how to increase loyalty in nearly every aspect of the business – from decisions about the customer experience to product development, sales, or service. Organizationally, the company’s loyalty operation will collaborate with CRM and social marketing efforts – often under the same leadership.
Just as every customer is unique, so is every brand. Customer loyalty is the most valuable asset a brand can possess, and it’s a process of constant improvement. Whether you are just starting out with loyalty solutions or actively integrating them across your business, there are many opportunities to enrich customer identity to deliver experiences that create deep emotional bonds and lasting relationships with customers.
Chris Wayman is EVP at Merkle Promotion & Loyalty Solutions