We all have them – those obnoxious little plastic loyalty cards on our key rings. Mine seem to last only a few months before the keys scratch off any meaningful information, leaving me with a reminder that my next check-out is going to be an exercise in frustration as I try to remember whether we registered with my phone, or my wife’s, and if I updated my address information since our move, so they can look me up. Here’s the dirty little secret of the loyalty industry – it actually doesn’t make customers more loyal. The key? Online communities via blogger outreach.
What the loyalty industry COULD do, if implemented correctly, is incite loyalty-like behavior through custom special offers, coupons, and services that make people want to go there to save money. But let’s be honest, when is the last time your grocer really hit you up with a targeted deal that you just had to take advantage of. Grocery stores are not Amazon. And they may never be, based on the current set of data they have. They simply don’t have the critical mass of customer data, transaction data, breadth of selection and list of willing vendors to target and segment their customers. Despite this fact, it hasn’t stemmed the growing tide of retailers investing a lot of money in these system. Loyalty programs do drive sales, in general. What loyalty programs DO NOT do is make customers FEEL more loyal. And there is a big difference.
Loyalty is about emotion . . . feeling. Why do I choose Disney World for my family’s vacation, despite it being 3X more expensive than Six Flags? They both have rides, over-priced food and long lines. What does Disney offer that makes it worth-while? The emotional connection. I feel so strongly about Disney World, that I’m willing to pay more, drive farther, and end up more tired just to go there.
That kind of devotion doesn’t come from incentivized purchasing behavior. It doesn’t come from barcodes on plastic key fobs. It’s much more special than that, and much harder to build. We build emotional connections with our things, with brands and many times with our retailer choices. Despite my small collection of loyalty cards, I almost always go to Walmart for grocery shopping. This is in spite of the fact that after testing it out, we found that our family saves money more than half the time using a loyalty program at a competing grocer. But my perception of Walmart is that it’s cheaper and easier . . . I don’t want to bother with looking at what products get a discount. I want to buy the stuff I want, and get out without spending a fortune. Even though I know my perceptions and feelings may be incorrect, I still trust them when making buying decisions.
Loyal customers will tell friends about you, and go out of their way to purchase your brand. Despite Apple’s lackadaisical attitude toward innovation since the passing of Steve Jobs, Apple loyalists defend it like the last die-hard Republicans cheering for Mitt Romney in 2012. That’s the kind of loyalty that comes from a brand creating an emotional relationship with their customers. And our research backs this up – brands who invest in building online communities are building TRUE loyalty, the kind that makes customer FEEL like they want to do business with you. In the Collective Bias produced whitepaper, Uncovering the Value of Customer Digital Connections, we found that customers who had chosen to connect with a brand on via Social Media had a higher frequency of purchase, larger basket size and a higher overall level of satisfaction.
Brands that invest in building real relationships with their customers online will build true loyalty. Following the grocery example, if my primary loyalty driver is feeling like my life is simple, and I’m not spending a ton of money, I could be swayed with online content showing me cheap and easy meal plans for my family of 5. If I have questions and they respond on Facebook with additional tips, or create new content to show me how to do something in the kitchen . . . I’m beginning a very different emotional journey with them that will almost certainly result in me buying those meals in their store. The content makes me feel understood. The conversation makes me feel emotionally invested. Much like old mom and pop stores, I may not come there because of selection or prices, I may come because I know Kelly from the Facebook page now, and I want to help her out. I have a personal emotional investment with my relationship with the company now. My interaction with the store in social media has built a relationship that would have been almost impossible to build in any other way.
Traditional Loyalty programs do not build true loyalty. It’s a longer play, but combining your loyalty program with your online community will help you build the perfect storm of true loyalty, and incentivized purchasing behavior. You’ll move from customers seeing your special offers as coupons, to a delightful surprise in their inbox, reinforcing their emotional bond with you. In addition, the data you gather from your social connections can provide additional rich insights above purchasing history to use in your targeted marketing.