In my neighborhood, you can’t walk a block without tripping over a yoga studio. Yet I go to a place called Pura Vida, almost exclusively. They’re my favorite. I’ve told tons of people about them. Why? A lot of little things. I love the teachers and the other students. They have a really simple 10-class membership and they send me an email reminder when I’ve got just two classes left. They have “pay what you wish” Thursday night classes. They provide free mats. And when I was running late to get to class last week, and passed the owner going home on the sidewalk, she ran back to the studio with me and unlocked the door so I wouldn’t miss my Thursday night session.
Am I loyal to Pura Vida? You betcha.
In this world where consumers have an abundance of choices, the idea of ‘loyalty’ is on most leaders’ minds. In fact, last year, IBM’s global study of midmarket CMOs found that creating and sustaining brand loyalty is the top concern, but 72 percent of them don’t feel sufficiently prepared to effectively build this loyalty.
Researchers have tallied that in the US alone, there are more than 2 billion loyalty program memberships, which nets to about 18 different loyalty programs per every American household. But a deeper look showed that with all those programs, each household had used only eight within a year.
Loyalty can no longer be ‘solved’ by merely issuing a key fob and doling out points. Instead, the most successful brands think about loyalty as an ecosystem – a strategic chain of experiences that supercharge brand relevance, create meaningful, equitable relationships between businesses and consumers, and give people a reason to keep coming back again and again.
The loyalty ecosystem (pictured above) is made up of activators like rewards, points, membership, surprises and community involvement. These loyalty activators can help gain and sustain brand relationships either in combination or on their own, depending on your audience. But just as important, and often overlooked by marketers, are the every day interactions people have with your brand. In fact, most surveys show that price, product and service are the key drivers of loyalty, and critical components of your loyalty ecosystem.
In our Game Changers report, Wolff Olins explored the five behaviors that personify successful game-changing organizations. Because loyalty is not a ‘program,’ but instead, a reflection of your brand on its very best day, these five behaviors can also influence successful loyalty strategies.
VALUE-CREATIVE > FAIR VALUE EXCHANGE
There are many new ways to think about value exchange. Regardless of it being based on price, information or behavior, the exchange must be seen as equitable and worthwhile.
• Discounts: They’re the tried and true way to encourage customers to return, and still considered to be highly valuable, based on the success of programs like Nordstrom Notes and Sephora Beauty Insider, in which consumers accumulate points based spending that can be ‘cashed in’ for product.
• Data: Many people, and Millennials in particular, are becoming increasingly comfortable sharing personal information in order to get deals and discounts, as long as what they’re getting is as good or better than what they’re giving. American Eagle Outfitters and Crate & Barrel are two examples of retailers who have partnered with Shopkick to exchange rewards for store check-in information.
• Ownership: Loyal3 has set up a platform that enables companies to sell or give shares of their stock in $10 increments. So for a very minimum investment, you could own a piece of Kate Spade, Juicy Couture or Lucky Brand, and in return, feel much more personally involved and invested in its success.
THE ASK : How can you structure your loyalty offers so your customers are giving and getting input and output that benefits you both? Do you understand what is valuable to your customers, and in return, how to offer them products, services and experiences that create value in their lives?
BOUNDARYLESS > SOCIAL COMMERCE + CURRENCY
In the world of commerce, the notion of ‘social’ leads a double life. One side is about the desire and ability to make a positive impact in the world. The other aspect of social is about community, and one benefit of a solid loyalty strategy is connecting customers with other people like them.
• American Express’ “Have you done something amazing with rewards points” prompt on Facebook and Twitter, and their brand-partnership Twitter hash tags encourage public conversation around brands in an authentic way, while providing a platform for people to bolster their own cultural currency.
• Nike’s “Make it Count” was inspired by the insight that people are propelled by recognition, and resulted in a social platform that literally equals the playing field, allowing people to compare their different type of physical accomplishments with each other. Customers receive recognition and support from both the community and Nike.
• On the more altruistic end of the social spectrum, Coca-Cola’s “My Coke Rewards” gives users the ability to collect points, enter sweepstakes, and also donate those points to their school, to help it maintain arts and sports programs.
THE ASK: How can your brand create a sense of contribution and community by giving people the ability to interact with and contribute seamlessly to their inner and outer networks?
EXPERIMENTAL > SERENDIPITOUS SURPRISES
While the delivery of seemingly random rewards feels completely serendipitous to consumers, the most effective unexpected surprises are really the result of two things: a brand’s keen understanding of their customers and the savvy use of data.
• Panera’s entire loyalty strategy is built on giving away complimentary products and extending invitations to exclusive tastings and demonstrations. This allows them to not only surprise and delight their customers with an unexpected show of appreciation, but also forms the basis for a very effective sampling program.
• Best Buy ‘randomly’ invited a handful of shoppers and their families to an exclusive preview of the latest Twilight movie, and you can be sure that the word-of-mouth those lucky viewers generated was worth their weight in popcorn.
• Zappos will sometimes randomly surprise customers with free overnight shipping, when it benefits both their fulfillment ability and the new shoe owner.
THE ASK : Are you experimenting with targeted serendipity? How can your brand tap into insights and creativity to point consumers to things they didn't know they wanted to see?
USEFUL > SIMPLICITY TRUMPS ALL
While consumers today suffer from an overabundance of choices, even those who know what they’re looking for are experiencing a sort of barrier fatigue. Hidden loopholes, small print and tedious exclusions are all barriers to engagement. Brands that make it easy for people to use their loyalty offers have the advantage.
• Convenience and Control: The Whitney Museum in New York City offers a “Curate your own” membership program, enabling people to customize their benefits based on categories like social, insider, learning, family and philanthropist.
• Instant and Tangible: CVS Pharmacy has in-store coupon centers that spit out personalized coupons for use that day.
• Payment and Place: Platforms that enable rewards to be linked with place, such as Foursquare and Shopkick, are making it easier for people to reap the benefits of loyalty strategies. And payment apps, like LevelUp, encourage repeat visits by speeding up the payment process and providing discounts when users link their credit cards to a retailer-specific QR code.
THE ASK : When was the last time you audited your customers’ user journey and experience of your brand? Have you taken opportunities to create hassle-free interactions for your customers?
PURPOSEFUL > FROM ‘LIKE’ TO ‘LOVE’
Your loyalty strategy should move people beyond a non-committal preference for your brand to heart-felt dedication. To do that, brands need be as loyal to their customers as you’d like your customers to be to you. That requires a loyalty strategy ecosystem that compliments your brand’s purpose and supercharges your entire brand experience.
• American Express definitely thinks about loyalty as an ecosystem. It starts with their membership, which offers personalized rewards options based on a member’s Facebook likes and interests. Members earn points that can be used for social good, travel, or almost anything else people would want. Their programs are integrated with the social Web, making it easy for people to tweet and post about how they used their rewards points. And their rewards provide real value (monetary rebates in this case) because of the partnerships American Express has with many retailers.
• Similarly, for Zappos, loyalty is a result of the emphasis they put on personalized customer service. One of their most valuable brand assets is their authentic community of brand-fanatics united by their common love for the brand. Community members are incentivized to post reviews online and often do. Members are invited into the VIP program (but invitations are issued very liberally!), and all VIPs are treated to a small set of highly useful perks. These include a special site on which to shop, guaranteed free next day shipping, a VIP phone number to call for customer service, as well as an exclusive online outfit-builder tool.
THE ASK : How can you build a loyalty ecosystem that’s not only useful to customers, but also communicates your loyalty to them?
So remember my yoga studio story? I said I was ALMOST exclusively devoted to Pura Vida yoga. I feel like they get me. They’ve designed their experience with me and my lifestyle in mind. They’re a brand I am proud to be associated with.
But just as I have a handful of “best” friends who all play a different, yet essential, role in my life, I also have a couple go-to options when I need to relax, reinvigorate and reconnect. It doesn’t mean I love Pura Vida any less – it just means I don’t rely on them to fulfill my every need.
And this is a good lesson for brands crafting their loyalty ecosystem – don’t expect exclusivity, but instead, look for the natural moments of loyalty you can give and receive in your customers’ lives. Pura Vida’s reminder email that I’ll need to buy new yoga classes soon is useful and it keeps me going back. Enabling these types of valuable connections makes your brand insightful, desirable, and indispensible, and helps the people you love most love you right back.