Loyalty is Dead. Long Live Loyalty

Loyalty is Dead. Long Live Loyalty

James Sandrini 12th December 2018

Businesses have this annoying habit of taking a word that means something virtuous and converting it into a self-serving, commercial chimera.

Empower. Values. Ecosystems.

All. Ruined. Forever.

Loyalty, in one’s personal life, means a lot. Loyalty, in the corporate ‘space’ (I swear, I can stop whenever I want) means…not a lot.

Words matter – that’s why we write them down – and the word ‘loyalty’ is regularly misappropriated. Irrespective of the rationale, loyalty is unwavering. We’re not sometimes-loyal or occasionally-loyal. We’re loyal.

So, when a business conflates loyalty for whatever their latest promotion happens to be, they’re confusing our loyalty for cheaper stuff, for loyalty towards their enterprise.

People don’t like choice. We like automaticity. We’re loyal to convenience and simplicity, perhaps more than we are to anything else, including cheaper stuff. You love your parents, but they’re waiting an extra half hour at the station, in the cold, when you’re warm and cosy and watching TV with a pizza on a Sunday. Fact.

Fundamentally, loyalty is being comfortable making the same decision as the prior, similar occasion. For a business, loyalty should be about helping customers avoid having to make yet another choice and feel comfortable choosing to spend their money with you, again.

Every time a customer buys your product, you’re adding to your cumulative advantage; your product is gaining value over your competitors – the products they didn’t choose.

"Three-quarters of consumers believe loyalty programs are for brands to show their loyalty to consumers"
Harvard Business Review

I’ve read conflicting reports related to brand promiscuity in 2018. Some say that younger audiences are less loyal to brands, some say more. What we do know is that a younger consumer is more likely to try a new brand than an older one and that it’s never been easier to steal attention away from your competitors.

The hallmarks of a successful loyalty programme

Rewarding & supportive

Customers will work hard if rewards are consistently available and worth their time and effort. So, any loyalty programme needs to be intuitive (or very well explained) and offer support should the user become puzzled at any stage in the process.

Regular & straightforward

Offers and specials need to be consistently available, very rarely reneged upon and simple to understand. Transparent communication through clear copy & UX are vital in translating trust to the end user. And redemption should be just plain easy.

Personalised

In the modern marketplace – straying away from my personal interpretation – that means offers that are specific to a particular segment of the target market, and inspiring rewards that match their values and goals.

Advocacy-driving

By their nature, loyalty programmes are for the few, not the many. Only a small proportion of your audience will care enough (or know enough) about your business to sign up and utilise the proposition.

You’re relying on these people to share the word, sing the praises and introduce others. Look after them.

"According to a Forrester Research study from 2015, the majority of users’ time was spent using just five non-native apps they’ve installed from the App Store"
Techcrunch

What's changing now

App abandonment  

Loyalty programmes are ideal candidates for tech transformation: Reams of data, constant communication and in-the-pocket availability for the consumer.

However, while the barrier to entry continues to decline, the value of adoption may be sinking with it.

Non-native apps (those that don’t come with your phone) are rarely used, beyond a few, key options. And those that do tend to have sufficient range to be a prime problem-solver, either singular:

– Banking

– A go-to game

– Social channel

Or an aggregator, such as:

– Deliveroo

– Airbnb

– Netflix

You can only move money around with your bank, so you need their app. You might play a stress-relaxing game for hours on end, but chances are you’re not playing it in a year or two. Social channels tend to have hundreds of millions of users (at least), so act as aggregators for a certain kind of content.

Aggregators make for ideal apps. They act as a single entry point into a heterogeneous blend of dynamic content. No single operator could get close to offering the medley of locations, types of accommodation or range of prices that Airbnb do, for example.

So really, what chance does a singular, branded app have? Why would a consumer even bother to take the effort to download it, let alone use it with any regularity?

In a vacuum, loyalty programmes are ideally located on applications. In reality, considering the competitive landscape and user behaviour, they rarely deliver results.

"A staggering 92% of adults belong to a reward card scheme - with the average shopper signed up to three"
Moo.la

Loyalty fatigue

The average UK shopper belongs to between 3 – 4 loyalty programmes. That’s a lot. Enough to forget who they do and don’t have this relationship with, bar the odd email.

Too often, brands rely on the customer to take the lead, rather than developing specific, regular communications with them; rather than creating specific, regular events for them; rather than considering specific, regular rewards for those that engage directly with them.

If loyalty were considered a separate revenue stream, as it should be, then it would receive more attention. For this to happen, operators need to think about it on a different axis: It’s not an appendage for the everyday proposition, rather it’s in a standalone fight with a series of competitors, every single day.

Increased accountability (thank you data)

Once upon a time, a clever soul figured out that they could increase their share of wallet by rewarding customers for visiting their store, instead of their competitors.

This notion, while simple is regularly forgotten or dismissed, however. Many-a-programme exists for…some reason, rather than this basic goal.

You need to spend £100 at Subway to get a free meal. £200 at Wagas. Now, let’s consider the lifetime value of their average customer and how many times those same customers visit on average each year, then try to figure out how on earth Subway and Wagamama’s came to these bloated totals.

At their commercial core, loyalty programmes are designed to reinforce or promote a certain behaviour in customers: Visit more often, spend more money, tell more people.

Businesses not only have more data than ever before but a more integrated, comprehensive view of each customer, thanks to powerful CRMs and a wealth of consumer touchpoints. And this means that marketers can be held more accountable for the mechanics of the systems they create.

What needs to happen next

Logical advancement

If the aim is to increase visits per annum – presuming the hypothetical business is supported more by volume than spend – then the starting point should be to consider how many visits current customers make each year, right? You’d think so, but all too often these basic equations are ignored in favour of mimicking opponents or trying to create something far grander than any customer would ever ask for.

Programmes should ‘nudge’ consumers towards a target behaviour, whatever that may be, in achievable increments. If you can increase total visits or spend by 20%, for example, you’ve outperformed the majority.

Access & offers

Promotions can form the base of a successful loyalty programme, but they shouldn’t be a crutch. Offers can encourage irregular users to trial the product more often, or discover new items, and they’re essentially the last resort in communications with lapsed users. But what about your regular customers – the people that are likely to make up the base of programme users?

Offers dilute the proposition to the extent that consumers only engage with the brand when there is an offer on, in the knowledge that the next promotion is just around the corner. Fast fashion, in particular, has fallen foul of this trope in recent years.

Access – the opportunity for customers to experience more than the average person – should complement promotions and form the base of interaction with the vast majority of engaged users. Private events, one-off products, early access; all ways to offer something tangible and valuable without weakening the core proposition.

PR-able programmes

As noted, few loyalty programmes reach further than a small minority that is already engaged with the brand. Ambitious businesses should be thinking about how to widen the net as early as possible by doing something different and noteworthy.

That means finding a single, significant hook to focus communications on. Ideally, something that ties into the broader mission of the business and the target market.

Care & contributions

Most people want to give to charitable causes more than they do. Lack of funds, time and headspace are partly to blame, but the real issue for many is not believing that their donation can help solve the problem.

Brands can help consumers to overcome this by automating contributions, while also aligning themselves with a positive cause.

Customer-service first

Things go wrong. The more loyal the customer, the greater the probability that they will experience something negative. And when that happens, they’ll demand that their loyalty is rewarded with personalised service and a swift resolution.

Bad customer service drives people away. Bad customer service prompts people to tell loads of other other people. Fail to solve this, and the remainder fail to matter.

Micro, not macro

The rise of 24/7 convenience and the ever-increasing potency of technology are acting to diminish any appreciation for delayed gratification (if it ever existed in the first place), and this is shaping how rewards need to be distributed.

Grandiose, point-based schemes are being replaced by programmes that reward users for most, if not all interactions with the brand. These ‘micro-rewards’ act to incentivise the next visit or the next purchase, and reward users for the most recent interaction and create positive sentiment.

Having a greater stack of potential rewards also helps brands to layer more personality into communications and with data capture. Speaking of…

Staggered, timely data capture

There are more touchpoints than ever to accrue data from, and yet capturing it has never been more challenging.

GDPR has limited how much information can be retained. Mobile transformation has decreased engagement in longer, multi-field forms. Data leaks have rightly scared people away from absent-mindedly handing over their own personal information.

Digital privacy is now a popular concern, but this shouldn’t stop you building a valid profile of each loyalty member.

Start small and focus on conversion. Don’t ask for superfluous information that you will not need to sign up the customer. Then, during the customer journey, find appropriate occasions to ask for more information, ideally aligned with rewards.

This may mean asking a regular customer which product line they favour, in order to lend them a one-off discount on that range. Or requesting their home address to send them a package. Or simply asking their opinion on a subject, in exchange for a thank you.

Little and often applies here too. A single question at the end of an email – or on a call, or in store – is far more likely to be answered than a survey.

Customers are trying to find brands that represent them. They want to be loyal. They just need a little help.