The New Architecture of Brand Loyalty

Feb 17, 2016

There are so many pervasive myths these days, about customer loyalty and loyalty reward programs. It’s getting harder for independent retail entrepreneurs to think of it in terms of the customer experience they are providing.

I’d like to take a minute then, to deconstruct what loyalty really means to Millennials and the digital native customers of the future, who are increasingly becoming the consumers of the present.

The right tone has to be embedded in your content and the a more emotional flavour, even of the technology tools you choose to use must be able to reach consumers with authenticity.

The Harvard business school, among others, have been debating and writing about this for years. Now that retail is moving to the cloud with POS systems and that there are SaaS API integrations available, loyalty marketing is about to be disrupted, and it’s good timing. With algorithms, big data and improvements in customer analytics, there’s no reason why loyalty marketing can’t be highly personalized and reach consumers where it really matters.

The Search for High Value Customers

Loyal customers are not simply high-value from a transactional basis, they are more emotionally invested in your brand, better online brand advocates and produce value in other ways.

In 2015, consumer driven content and user generated content (CDC/UGC) became more popular than ever, this results in branding that’s closer to the audience, since digital natively customers enjoy creating content, not just being on the receiving end.

If the consumer is in charge of the sales funnel, empower them to be your brand champions. Consumer centric content is irresistible, and a source of delight for your top consumer advocates.

Legacy Loyalty No Longer Works

But there is something going on here, according to Deloitte, consumers are leaving brands behind and so called “loyalty” is in decline. That is, the competition for a place in the hearts of consumers is heating up! So you have to figure out how to be authentic, do visual story-telling like on Instagram & Pinterest and integrate CSR (corporate social responsibility) into your branding and public relations strategy.

Millennials value brands that care and give back to the world. In my own country of Canada, we have the Prince of CSR (Justin Trudeau) as our leader. His team’s skillful use of CSR in their PR strategy in my opinion, won him the elections.

A brand’s high value customers are then, those with whom your brand can earn greater trust, commitment and advocacy from! It’s not enough to have a Loyalty rewards program, you have do something powerful with it. It has to be in your brand’s control, your data, your campaigns, you are in charge of your own ROI.

Gone are the days of gimmicks, the answer isn’t more loyalty cards, sweepstakes, coupons, points, promotions or emails. It takes a rethinking of what loyalty really means in a digital age.

We Need to be Consumer Centric and not Assume Anything

The real mismatch begins here:

  • Consumers think LRPs (loyalty reward programs) are for brands to show their loyalty to consumers
  • Brands (and marketers!) think that LRPs are a way for consumers to show their loyalty to brands. Sorry legacy brands, keep up with the times!

In a comedy of errors then, the goals of a loyalty program must change, but haven’t adapted either to the new consumer reality or to the retail technology that exists.

  • It’s only a matter of time and new loyalty solutions to drive a paradigm that is more profitable for brands and integrates Millennial marketing strategies with more data augmented technology that leads to better loyalty branding and marketing.

Deconstructing What Loyalty Means

However in this article, I’d like to talk about how loyalty marketing needs to encompass better brand loyalty and consumer-centric offers. Marketing needs to have data on the consumer, about their value, recency and retention portfolio. Where are they in the customer journey and if they are a brand advocate online are they being gamified with incentives to show our gratitude.

Building Personalized Value

  • Brand loyalty is an emotional experience, how to create campaigns that captivate the emotions of customers in your vertical?
  • High-value customers are more engaged with a brand, how to increase their shopping frequency?
  • It’s not about having an app or a loyalty card or being part of a loyalty coalition network, it’s about personalized offers that build engagement and increase trust with your audience that are optimized by customer data, product data and lifecycle segment insights.
  • Basically it’s data driven loyalty marketing that’s based on smarter insights while building a more differentiated and memorable brand.

New Flavours of Connection

Loyalty is about emotional salience, behaviour second. That’s why consumers trust CDC, UGC, CSR so much more than legacy sales and legacy advertising gimmicky approaches.

In 2016 we’ll see an advent of a few things:

  • Improved customer analytics
  • Customer lifecycle segment optimization
  • Location marketing in real-time
  • Increased personalized
  • Better triggered marketing automation
  • Improved integration of social media with mobile commerce and Reward points
  • SMS marketing competing with Email marketing (and winning!)
  • More integration of consumer generated content into branded content
  • More integration of Corporate social responsibility campaigns with branded hashtag campaigns

What Does Brand Loyalty Feel Like

What this will all result is is, more unique emotional storytelling about your brand.

Loyalty is about connection, about creating high-value relationships with your audience, not about just, an economic transaction
  • Repeat purchasing is the result of emotional connection
  • Retention is the long-term is the result of more personalized offers
  • Higher sales is a function of more authentic marketing with data obtained from your LRP

The Holy Trinity of Loyalty

Brands that can go beyond a transactional psychology towards a relationship-centric one, can really reach Millennials a lot easier in the new value system shift taking place among consumers.

Gratitude

Your brand has to create ethical emotional attachment in the consumer, when is the last time you said thank you to your loyal customers? If loyalty is a function of a feeling that is reciprocal, authentic and emotional; focus on inspiring emotions that resonate like a wave of trust and empathy and compassion in the world.

The answer is to focus on fostering the emotional response that is most likely to drive loyal behavior — gratitude. — Mark Boncheck

By definition, gratitude is “a readiness to show appreciation for and to return kindness.” Note that gratitude is inherently reciprocal. Can you as a brand embed this in your loyalty marketing offers and seasonal campaigns? Try, if you fail the worst that can happen is a lack of an emotional response from your audience.

Reciprocity

Brands have to give something and in return they get a response. For example, if you reward with loyalty points social media content and UGC, friend referrals and so forth with loyalty points, well guess what! You are showing your gratitude to your customers by giving them something.

This create a psycho-social attachment with your brand. We become emotional about what we invest in. Digital natives are proficient and prolific content creators, what’s it to them to create a selfie with your product on their IG? They do this anyways. So give them something for it.

It’s arguable that a digital native customer is higher value just by the fact that they are more active on social media and that peer influence has a greater impact among younger consumers.

Loyalty

Loyalty is then not the cheap feeling of just using another loyalty card, or the digital wallet equivalent. It’s an exchange of energy and an engagement level on the part of the consumer that inspires your brand to be better because of the authenticity of that consumer.

Loyalty on the part of the consumer goes beyond $ dollars, they want to join a brand in making the world a better place. That’s why CSR is so standard now. Since consumers trust their peers and are less trusting of branded content by marketers, smart brands do more of this and less of that.

It’s the same thing for a retail store, you can create unique branding by empowering your customers to help you create it for you. The new world of loyalty marketing goes beyond transactions, and beyond gimmicks, it goes to where the consumer lives, and to reach the hearts of the most educated, diverse, and entrepreneurial generation in history, your retail brand will have to do loyalty differently too.

Summary for Independent Retail Entrepreneurs

To create more emotional brand advocacy:

  • Try a User Generated Content (UGC) Campaign or Contest rewarded with loyalty points to the top participants
  • Create a Corporate Social Responsibility campaign (where your brand contributes in some way to a feel good meme or gets involved in the local community, for example).
  • Validate and give thanks to all Consumer generated content (CGC) and reward it with tangible incentives (point accelerator program to this specific customer group, for instance, for purchases made in a specific month).
  • Feature customers and UGC images and videos on social media and in-store product displays. (Millennials trust their peers)
  • Identify “Influencers” of your audience and do a Campaign with one of them.
  • Do a loyalty birthday campaign, thank you messages after transactions over a specific limit.
  • Create a Gratitude campaign targeted to your VIP high-value customers that gives them perks and brings them back to the store.
  • Create Seasonal campaigns with very specific goals and defined incentives with your LRP that’s customizable by you.
  • Do marketing automation that reduces churn at touchpoints of recency, dormancy and that boosts engagement with top-earning customers.
  • Do adopt visual storytelling on Instagram, Pinterest, YouTube and possibly (Tumblr, snapchat, SMS).
  • Do ask your consumers if they prefer Email, SMS or other channels and what the best time to send them offers is (day of week and time of day).
  • Cultivate a more authentic approach to customer offers that has less flash and more heart.