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How To Actually Build Loyalty Through Your Loyalty Program

Zsuzsa Kecsmar is the CMO and Co-founder of Antavo, the enterprise loyalty program technology provider.

Loyalty programs have come a long way. Although companies have traditionally used their loyalty programs as discount programs and reengagement tools, these programs have much more potential, which the majority of organizations have yet to explore. That’s because companies have typically built their loyalty programs around the customer’s buying cycle. And for good reason! When companies use the loyalty program as a discount program or to reengage customers, it makes sense to nurture them in one buying cycle and then lead them toward the next cycle.

But if loyalty programs are built around transaction-based thinking and marketing, they won’t be capable of building real brand loyalty. And that’s an argument I see play out a lot online and in the boardrooms: “Isn’t the loyalty program a discount scheme?” “Does it really have the power to build true loyalty?”

It turns out that the answers to these questions depend entirely on the way individual companies approach their loyalty strategy and build their rewards program. So, yes, loyalty programs have the power to create true loyalty, but first, companies need to stop thinking within the confines of the buying cycle.

Although many organizations have their own specific definition of the purchase cycle, it is the sequence of events from awareness through consideration, intent and purchase. It’s important in the context of loyalty because companies often tend to interact with their customers a lot within the buying cycle. Once one cycle ends, there’s usually a period of very little genuine interaction until the next cycle begins, and that’s especially true of loyalty program communication.

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I would argue that, for many companies, this way of thinking represents a lost opportunity to build a genuine connection with customers. At the same time, I don’t want to detract from the importance of discounts. Some businesses can benefit a lot from discount programs. Furthermore, there will always be some customer groups that are discount-focused. Coupons work wonders to drive these groups to complete purchases. But, for customers who want to connect with their favorite brands, discounts only tell a small part of the story.

There are also customers that connect with your product or service quality. Perhaps they connect with other customers who share the same passions, needs or hobbies. They are having conversations with like-minded people about what they buy and why. Focusing on this human element with the loyalty program will help you go beyond buying-cycle thinking.

Weaving Loyalty In And Out Of The Buying Cycle

There are already a handful of companies committed to connecting with customers outside of the buying cycle. One of them is Nike. The sportswear giant has a loyalty program that looks nothing like a traditional earn-and-burn program. Sure, Nike Membership offers rewards and plugs products, just like any other membership program. Yet, on top of that, it also provides workout programs, something members can use when they aren’t thinking about replacing their favorite pair of sneakers. That’s thinking outside the buying cycle!

One of our clients is an outdoor and mountaineering retailer and is another example of a brand that rewards customers for doing what they’re passionate about. It rewards members who go out for hikes and enjoy the great outdoors, thanks to an integration with an activity tracker.

The examples don’t stop there. Fashion brands, hotels, shopping malls and even food and beverage companies can do the same by rewarding sustainable practices, offering members-only entertainment or events or running social media campaigns rewarding members for sharing what they love. In fact, this strategy is on track to becoming much more popular in the near future. In my company’s Global Customer Loyalty Report 2022, we asked more than 320 loyalty program owners about their plans to reward non-transactional behavior. An astounding 77.3% responded that they planned to do so in the next three years.

If you’re ready to connect with customers, reward members for activities closely related to your brand without expecting another immediate transaction. Loyalty is a long game — it takes time to build genuine connections. So think of these campaigns and communications as a way to connect authentically and emotionally without a direct “sales-y” call to action. This approach will help you transform a discount scheme into a loyalty-and-brand-building membership program.

Commit To Connecting With Customers

Why is connecting so important today? As Geoff Colon put it on the Microsoft Advertising blog, “Successful companies are those that excel in creating exceptional customer services experiences on digital platforms and in the real world.” I couldn’t have said it better.

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Now more than ever, your competition is close behind, ready to snap up any wandering customers. According to Fresh Relevance, during peak seasons in 2021, nearly one in four customers purchased from a brand they hadn’t tried previously. In other words, many of your customers are interested in trying new things. Try giving those customers new experiences within the familiar context of your brand through new products, experiences, services and a new approach to communication. And, of course, give your loyalty program members more reasons to stay by building a stronger connection.

Nowadays, building a stronger, more genuine connection might be the only way to maintain your market share and increase customer advocacy in an age of relatively extreme financial and emotional volatility.

Start By Creating Reasons To Reengage

If you would like to implement a loyalty program or transform it into a program that connects with customers, start by thinking about what you can offer customers that relates to what they already love. Consider ways to engage customers through charity, hobbies, activities, passions or causes like sustainability. Rewarding customer for related non-purchase behaviors is one great way to connect. Sharing members-only content that helps customers achieve their goals is another. Alternatively, allow members to use their loyalty program points to support a cause they love or to earn experiences they can enjoy between purchases. All of these examples are potential reasons for customers to reengage, and such initiatives are the best ways to help create true brand love and loyalty.

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