Loyalty is a bond that can be strengthened, weakened or broken. It is forward-looking and asks ‘will you keep coming back to us?’.
In the consumer world, loyalty grew as a phenomenon whereby repeat business was bought at a price, with regular customers reaping rewards through a wallet full of loyalty cards. The problem was that this trained the savvy shopper to be on the lookout for the next best thing, resulting in an ‘arms race’ between rival operators. The marketplace since appears to have reached saturation point; it is not unusual for the average consumer to be signed up to as many as 20 loyalty cards. Reward points have become a commodity, with little significant added value to differentiate between schemes.
Retailers and marketeers have been reconsidering what loyalty means for them. Many are looking for better ways to engage their audience, striving to form an emotional bond, rather than a purely transactional commitment; moving customers from a points system to a more meaningful bilateral relationship.
This relies on triggering the customer’s heart as well as their head. Tapping into their interests and engaging them in a ‘real’ way. We see three key components to achieving this:
- Relevance: targeting individuals appropriately, with a degree of personalisation which makes them feel special
- Sentiment: giving customers the feel-good factor, be it through experiences, content, games or inspiration
- Dialogue: instigating two-way communication, endearing customers to feel valued; the brand is a friend who cares and listens
Of course, delivering appropriate relevance, sentiment and dialogue relies upon rich understanding of the customer and for this data is key; technology is providing the platform for engagement and social media is playing a greater role in strengthening brand trust and supporting data strategies.
‘Free People’ – a bohemian lifestyle brand, part of Urban Outfitters – operates a community-based loyalty programme called Free People Me. This is, to all intents and purposes, a social media platform on which customers share pictures and recommend products to one another. The more an individual interacts, and the more ‘love’ they get from the community for their contribution, the more they receive back in rewards. Yet these rewards are not about discounts or points, they are high stakes excitement, like the opportunity to design an outfit, or invitation to a fashion show in a local store.
In an evolving retail landscape, the best in class customer engagement strategies rely far more on generating a lasting sentiment, than coupons and cards. Effective cut through will come from rewarding the customer in a real, meaningful and human way.