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Consumers love a great loyalty program. In fact, loyalty programs are more popular than ever.
A recent study titled, The Loyalty Report 2015, showed that the overall influence of a loyalty program on customer behavior appears to be increasing. This is positive news for loyalty marketers, but it is not a cause for overconfidence. Many brands offer some form of rewards and incentives, and consumers also have more choice than ever before. Even despite their ubiquitous popularity, if a loyalty program does not stand out, or fails to differentiate itself from the competition, it will still fall behind.
Tuesday’s Loyalty360 webinar presented by Bond Brand Loyalty called, “Resolving Five Tensions on the Evolution to Brand Loyalty,” centered on this topic and focused on some of the essential takeaways from the Loyalty Report 2015.
During the informative presentation, the speakers, which included Scott Robinson, the Senior Director of Loyalty Consulting & Design, and Sean Claessen, EVP Strategy & Executive Creative Director, also discussed how a loyalty program can distinguish itself from the competition and the improvements that can strengthen an underperforming program.
“Through every interaction, you are either building loyalty or you are potentially eroding it,” Claessen said. “So it behooves us as marketers to take stock of what all the different mechanisms are doing by way of engendering loyalty in the customers that brands serve.”
To maximize the credibility of the results, the 5th annual Loyalty Report 2015 examined almost 6,000 consumers and collected data from more than 105 loyalty programs from across almost every industry including retail, payments, CPG brands, dining, and more.
“We have uncovered how important it is for program operators and loyalty marketers to think beyond simply the rewards,” Robinson said. “What we know is that consumers are motivated by multiple things. Marketers need to look to the full complement of things that engage consumers, increase enjoyability, and deliver on consumer expectations.”
Therefore, Claessen and Robinson stressed that a loyalty program must serve the brand. And how, ideally, loyalty programs should act as the bridge between the brand and the customer experience it wants to provide. As the title of the webinar suggests, the presenters walked attendees through the five concerns and considerations that should be top-of-mind for all loyalty marketers today.
1) The Loyalty Program as the New 2nd Marketing ‘P’
The 5th annual Loyalty Report 2015 shows that consumer participation is on the rise and this requires marketers to consider loyalty programs in a new light. Claessen and Robinson actually recommend placing a new ‘P’ among the four paragons of marketing pillars. They would like to see “program” join the existing terms that already include, in order, “product,” “price,” “promotion,” and “place.” They would like to see “program” placed second on this hierarchical structure right after “product.”
This also speaks to further report findings that showed loyalty programs to be the second most important factor in driving brand loyalty.
It is becoming clear that marketers are wondering how to evolve and differentiate their program from others.
“Many programs today look and feel very similar to others,” Robinson said. They employ similar loyalty mechanics, discounts, and benefits to engage consumers. Claessen and Robinson called these “me too” programs.
“To resolve this tension, marketers need to be really tuned in to what drives consumer behaviors,” Robinson added. “Because, increasingly, consumers are being selective about the brands that they are engaging with.”
It is true that consumers care about rewards, but they also care about so much more. Loyalty marketers must also understand if a program is worth the effort for consumers, if it meets their needs, if it is enjoyable, if it is simple, if it is easy to understand, and if it is brand aligned in a personalized manor.
3) Brand Loyalty
The Loyalty Report 2015 also showed that loyalty programs play a significant role in brand loyalty. Overall, 34% of respondents said that they would not be loyal to a brand if not for the program. 62% said that a loyalty program makes the brand’s customer experience better. And the largest portion of all (63%) stated that a program does, in fact, make them more loyal to the brand.
Therefore, Claessen and Robinson emphasized the importance of instituting a loyalty program that improves the entire brand experience. And to do this, a loyalty program must drive loyalty to the brand, and not just to the program itself.
This term refers to how marketers can learn from brands that create customer loyalty without actually relying on an explicit program.
“This topic could be the future of loyalty in building some of the mechanics we’ve come to know in formal loyalty programs, and stitching them right into the fabric of the brand,” Claessen said. “Informal approaches to loyalty may not bear the loyalty ‘program’ moniker, yet have cleverly and deliberately borrow and use many of the familiar elements of formal loyalty program design.”
The presenters expanded upon the concept of Nest Leaf, which perfectly encapsulates this concept. Meeting needs, making relevant communications, and producing personalized connections can increase customer satisfaction in ways that simple and impersonal rewards cannot.
Loyalty marketers absolutely must come to terms with the importance of mobile today. To overlook mobile is to flirt with failure. Almost every consumer is active on some sort of mobile device, and the Loyalty Report 2015 found that 48% of respondents would like to engage with a loyalty program via mobile. Furthermore, 62% of consumers have purported to be more satisfied with a program after downloading its related mobile app.
However, marketers must be strategic about their use of mobile. Because while incorporating mobile is imperative, consumers are already showing signs of what Claessen and Robinson call “mobile app’athy.”
“Mobile must make sure that it improves the program experience,” said Robinson. “It must make sure that it meets consumer needs. It must make sure that the experience, in and of itself, is enjoyable and that the benefits are obvious and significant.”
The brands that can demonstrate success through the use of an app or mobile device often show a ten or eleven-fold increase in the level of customer loyalty.
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