Brand Loyalty vs. Loyalty Rewards Program

Far too often, marketers confuse loyalty programs with loyalty, when in reality, a customer’s devotion to a brand is so much more complex. Let’s face it: loyalty marketing strategies centered around points and rewards simply don’t work. Today’s hyper-connected consumers have high expectations, short attention spans and a long list of brand suitors at their fingertips.

As companies strive to stand out, they must offer more than a transactional reward. They must offer emotional value. That means being able to excite and delight customers with consistent and relevant brand experiences, wherever they are on their path to purchase.

This is not to say that brand loyalty programs no longer resonate with consumers. Program memberships and retention rates are still strong, even growing in most industries. However, active participation and reward redemption rates are below 50% for most brands.

Why Brand Loyalty Matters

Clearly, companies are struggling to keep customers engaged and active over the long term. And that’s a huge loss when brand allegiance is at stake: highly engaged consumers make 90% more frequent purchases, spend 60% more in each transaction and are five times more likely to choose the brand in the future. If that’s not enough evidence, here are even more reasons loyalty matters:

Deliver Experiences that Customers Remember

Technology has not only changed the buying power of consumers, it’s changed what they want, think and expect. People desire intimate and significant moments, not just materials. Which means the first order of business for marketers is selling experiences.

For every dollar invested in improving the consumer experience, businesses see a threefold return, some industries even more. Companies who prioritize experience have seen a 58% increase in customer satisfaction and a 45% increase in loyalty over the past 12 months and expect a 60% increase in satisfaction and 70% increase over the next two years. By creating genuine, intimate brand engagements customers feel more valued and, as a result, bring more value to the brand.

Unite Offline and Online Data to Complete the Customer Picture

Armed with just a partial profile, marketers miss out on opportunities to tailor communications or, even worse, they send out inaccurate or conflicting messaging. Sending an email promoting a product that person already purchased is pointless, wasteful and annoying.

Plus, while some shoppers would prefer if salespeople knew about their online activity for better service in the store, many expect in-store employees to already know about their online interactions with the brand, including if they have an account or have made a purchase. Rightly so — they’ve logged in or directly provided transactional information at this point.

1. Create powerful experiences across channels.

While the emergence of the web, mobile, social and, increasingly, the Internet of Things has simplified the way people communicate, it’s certainly made the process of communicating with them more challenging. Consumers don’t think in terms of channels, so neither should the brands that engage with them. By leveraging their rich stores of loyalty data beyond traditional email and direct-response channels and into the digital space, marketers can devise addressable media campaigns that speak to customers in the same voice and continue the same conversation as they journey across time and touchpoints.

2. Wow customers with relevancy.

Remember, consumers are human. They like being made to feel special, like someone took the time to really get to know them. Recognizing customers at every stage of their buyer journey allows brands to offer customized and informative content, not just marketing messages or rewards, at appropriate times. Any chance to make their lives easier with insightful and valuable experiences goes a long way toward winning their hearts. Sending a postpurchase email is expected; serving helpful information throughout the decision process is thoughtful, personal and builds brand affinity.

3. Reward at the right moment.

No one likes to wait weeks, months, even years to accumulate enough points to redeem rewards. Quite frankly, they can look elsewhere for immediate satisfaction. Redemption rates for real-time rewards can run as high as 80%, a figure that drops in half when offered in a follow-up email two hours later. With a real-time customer identity solution, brands will know when members have taken action and can reward them with the right type of value at just the right time.

4. Make brand loyalty programs worth it.

Nearly two-thirds of loyalty program accounts are inactive, often within the first year of signup, mainly because of inadequate customer experiences. If people are going to take the time to sign up, log in and give brands their personal data, they want more than a membership program that rewards the highest spenders. Perhaps their shopping habits are seasonal, so time-sensitive rewards are not compelling. Or maybe they’ve recently made a large purchase, so the thought of spending more to earn more isn’t enticing. Armed with customer identity, marketers can discover the behaviors of the casual or even lapsed customers and create differentiated programs to engage them.

5. Delight and incite more customer engagement.

Being able to track customer activity across channels and devices opens up prime opportunities to upsell, cross-sell and enhance brand experiences. Identifying when someone is in research mode or has just made a purchase, marketers can increase spend and engagement based on known preferences or information housed in a brand’s membership database or CRM system. If a customer purchases a family vacation package, an upgrade to a suite, a spa getaway or a chance to earn points through a travel rewards program are all thoughtful and valuable offers that can help a brand extend the relationship and foster loyalty.

Brand Loyalty Examples

When asked what their favorites do better than other brands, consumers put their functional needs first, citing the importance of friction-free experiences across computers, mobile devices and physical locations. But emotional factors also came into play, as shoppers revealed how their favorite brands make them feel understood, valued and rewarded.

See more in our infographics:

The Future of Brand Loyalty

Fostering brand loyalty and retention among today’s digital-first customers is a much more complicated undertaking than even a couple of years ago. Continual advancements in technology have created a culture of device-hopping, demanding and fickle consumers. Brands that fail to engage them in just the right way, at just the right moment, are quickly replaced by competitors who can. And, yes, that includes people who have taken the time to join a brand’s loyalty program.

With a customer identity solution, marketers have the ability to do so much more with their data. They can build long-lasting, loyal relationships — not just “memberships” — by delivering highly personalized, valuable and unique brand engagements at the appropriate time.