The top four ways brands can earn real loyalty in the new year.
December 15, 2021.
Looking beyond the holiday deal season to build real relationships with consumers and deliver transformational growth.
While loyalty is always top of mind for most brand marketers, managers, and executives, all too often it’s forgotten during the winter holidays shopping season. With so much emphasis on deals, promotions, and yes - points, it would not be incorrect to call the holiday shopping season what it really is, the “transactional loyalty” season (although it doesn’t have the same festive ring to it).
But discounts, points, and deals are no longer considered tokens of real loyalty. From Chipotle growing past 25 million members in record-setting time to airlines changing their incentives to reward behavior totally unrelated to travel, brand loyalty programs need to create more than purely transactional value to stand out in the long term. If there is a lesson to be learned here, it’s that brands must construct their loyalty programs to expand their reach and adapt to new behaviors.
That’s why this season, we’re looking beyond the most wonderful – and transactional – time of the year to explore how brands can move past the short-term thinking of holiday promotions to build real relationships with their consumers and deliver transformational growth. We encourage you to explore these four territories to differentiate your loyalty program:
Win on service.
When your consumers reflect on why they’re loyal to a brand, good customer service often comes to mind. It’s what brands like Nordstrom are famous for, with their willingness to accept almost any aged product, or Patagonia’s Ironclad Guarantee.
Some brands may not want to create tiered levels of service to promote uniform quality service, but others will thrive on it. American Express Platinum Card members receive dedicated customer support lines with little to no wait time. They receive a thank you note at hotel check-ins. Avis Prefered and Hertz President’s Circle members walk out directly to their car and drive away with the scan of a QR code; no lines, no waiting. Chewy Autoship Members receive access to their Connect With a Vet program. These touches can be an incredibly powerful tool for consumer retention and generating positive brand sentiment.
Win on exclusivity and access.
Intricately tied to service is access, another powerful differentiator. Can you open doors for your consumer that your competitors cannot? By facilitating access, you have the ability to create valuable experiences, like how Chase members can enjoy exclusive dining and concerts, or enter Priority Pass lounges. Another great example is how Spotify partners with Ticketmaster to exclusively give its listeners early access to tickets for bands they over-index plays on, before they go on sale publicly.
Win on expanding value propositions.
Partnerships and “co-opetition” are a key way to expand the value you can offer consumers, without taking on additional costs. For instance, since travel is key to American Express card holders, they identified their users’ needs (like avoiding waiting in long security lines) and partnered with entities that provide solutions to problems to improve overall travel experiences (like complimentary membership to CLEAR). Rent the Runway and Tripadvisor partnered to increase the value of both offerings: Tripadvisor Plus members now receive access to Rent the Runway and can have merchandise delivered to their hotel rooms, while receiving discounts to both services. In an unlikely alliance, Starbucks partnered with Amazon to bring grab-and-go technology to their stores. Similarly, Target recognized operating a full service pharmacy was not their bread and butter, so they brought CVS in, and now both brands and consumers win. CVS members can access their rewards and prescription history at Target locations, and Target consumers get CVS pharmacy expertise and service.
Win on community.
A high emotional benefit that successful loyalty programs seek to nurture and amplify is community. A bond with a brand can be strong, but a bond with other humans around that brand produces a multiplicative benefit. In China, NIO - a competitor to Tesla - is famous for their NIO Houses, a showroom that’s become a community hub for events, and for owners to mix and mingle. Rapha, a cycling apparel and accessories company, had such an engaged community of cyclists, it also created an official club and paid community membership spanning the globe. This dynamic is what powers communities like Sephora’s Beauty Insider; their members appreciate discounts and points, but they participate and return to talk with each other, make recommendations, and even grow in status within the community, creating opportunities for gamification and repeat engagement.
To build lifetime value for customers, brands need to make huge moves in order to define what good looks like in loyalty. Transactional mechanics are important, but so are addressing core human needs. Average revenue per member will continue to be a benchmark, but increasingly so is gamification of activity and engagement levels, consumer sentiment, share of wallet, referrals and the willingness of your members to provide data and feedback.
Being the best priced option will always matter, but being the most loved option will always drive true differentiation and business value.
—Written by Holden Bale and Michael Madavi. Bale is a Group Vice President and head of Huge’s global Commerce practice. Madavi is a Group Director of Business Strategy.