Loyalty has evolved – and so should the manner in which brands think about it.
No longer is it just about a programme of stamps, or a one-off event; it's now about creating an ecosystem where customers actively feel a sense of loyalty to your brand.
This evolution comes from a sea-change in today's customers – they have completely transformed their expectations of the brands they do business with. As your customers continue to change, can you afford not to do the same?
Today’s consumers expect a relationship with the brands they frequent. This means that they want a brand to “know them”, and to personalise the experience. They want immediacy, with real-time offers and instant communication. They want to share good experiences on social media and feel empowered because they have numerous brand choices.
On top of this, they are “always-on”, with immediate access to information and brand shopping tools.
Why do you need a loyalty strategy?
The challenge in this environment is not only meeting all of those demands but making sure that loyalty is rewarding enough to justify the hurdles or time involved from the customers' point of view.
Many brands do this by simply offering people a reward when they shop a certain number of times – a free coffee, or a discount. While these are not, in and of themselves, bad or a waste of time, they cannot be the only strand of a strategy.
A loyalty strategy is important because, according to Harvard Business School professor Gerald Zaltman, 95% of all purchasing decisions take place unconsciously and emotions are leveraged to drive that decision.
On top of this, Epsilon's own research, carried out with the DMA in 2017, has found that 55% of customers tend to use the same brands, shops, and sites without looking for alternatives, and 66% tend to stick to what they know for convenience shopping. However, just 43% are not receiving any form of gift, and would like to see that change.
That shows that the proposition of loyalty has shifted and it is vital to keep up.
The new meaning of 'loyalty'
Loyalty is no longer just about the brand. It is not about the points, the discounts or rewards. It is not about a one-size-fits-all customer approach or just one campaign.
Loyalty is now about a strategy that connects consumers to brands, across every interaction and touch-point with the brand – all delivered with rapidity. It is about a holistic, 360-degree view of the customer. It is about the consumer’s inherent relationship with the brand.
To marry the programme and the strategy, it is crucial to mix the rational value (“I got my money’s worth”) with the emotional value (“This company values my custom”).
This can best be done by adding the hard benefits – economic and tangible rewards, such as discounts or competition entries – to the soft benefits such as status, appreciation, access, targeted rewards or experiences.
For example, our client Dell offers rewards customers discounts, exclusive offers or free shipping in exchange for a signup which further allows for communication. This combines the very tangible benefits - monetary or services - with a feeling of appreciation, of "being part of the club" that many consumers enjoy.
Likewise, another client Dunkin' Donuts runs its DD Perks program through a mobile app. This allows customers who sign up to order on the go, making the experience feel exclusive and rewarding. The app also includes free beverages upon signup and on the user's birthday, further adding a layer of soft benefit to the program.
The La Quinta hotel group also uses a mobile app to run its Returns program. The app allows customers login with their fingerprint and gives them access to features other customers don't have. These include notices when your room is ready, free nights using points and the ability to hold rooms instantly.
Bringing Walgreen's proposition to life
For example, as part of our work in the US, we delivered a 6.7% increase in sales for the pharmacy chain Walgreens by introducing the next-generation Agility Loyalty programme.
Tying into the brand’s wider positioning as a supporter of healthy living, we not only tied in online and offline purchases, but we also incorporated activity uploads from wearable fitness tech such as Fitbit. The result was an enrolment of more than 100 million customers, and a 6.7% increase in sales for the brand, along with a basket size increase of 4.7%.
More importantly, though, we see 100,000 reward redemptions per day; the sign of a scheme that has truly engaged its base.
The idea of brand loyalty as a concept has changed. It is now about a mixture of economic and mental rewards. It’s time for brands to recognise that – and to act.