The concept from our side is pretty simple, as this is our methods foundation for judging and comparing brands and how they do or don’t drive loyalty. We decided to take our internal work and turn it into public-facing content to help other brands and their marketing teams return customers into their loving arms.
The Drivers of Loyalty
From our POV, there are five drivers of loyalty. Those five drivers have smaller components driving them, but we’ll get to that in due time.
Each of these drivers are categories or customer marketing areas where brands either choose or choose not to prove to their customers that they care enough about them to provide the experience customers are looking for.
Financial incentives used to the buy-in for all brands to create a program for repeat use that was somehow supposed to create loyalty. While those programs molded in the old Subway Stamp model are still around, today brands need more than just small and obfuscated rewards to drive loyalty, but they still need to keep their wallets happy with:
Perceived or actual savings–Do I save money using this brand or at least do I believe I am saving money? Ex, Amazon, Zappos, Southwest Airlines
Select or members only pricing–Am I afforded a special rate as a loyalty member or customer? Ex, Grocery Stores
Reward/loyalty points–Do I accrue any points in an actual loyalty program that I can use to purchase products or services later? Ex, Airlines, REI
Sign-Up Bonus–Is there a sign-up bonus that is compelling enough to make me become a customer and encourage others also? Ex, Airlines
Longer lasting products–Are the products of such high quality, that despite the higher price, I won’t have to replace them as often. Ex, Patagonia, Yeti, Honda
Perceived personal value–Does the brand itself provide a certain level of satisfaction for being a customer that I just want to be part of the club or associated with the brand? Ex, Patagonia, Harley Davidson, Harvard, NY Yankees (dangit)
These sub-drivers are the parts of Financial loyalty speech that help us articulate the various financial rewards that can be created by brands to attract customers. Certainly, many of these also intersect with acquistion marketing, but we solely look at these efforts from brands, whether or not they engage in their practices, how good they are at them, and if we think these efforts are actually creating loyal customers.
Loyalty has been shifting, and while everyone likes to save, brands have found that savers aren’t loyal to any brand; only to price. You need something more than a rewards system to create customers for life.
The true loyalty currency is time. We know there isn’t much of it. It is moving faster. Seconds added to an online shopping cart or standing in a physical line feel like hours. Brands that are saving customers time, are winning customers loyalty. Some brands, in fact, are excelling at little else than a frictionless shopping experience, and they are being lauded as the most customer loyal brands around. Here are the categories of methods for brands that save us time:
Streamlined in-store/on-location shopping experience—Does this brand save me time, through any measure, while I am in their store?
Streamlined website/app shopping experience—Do they save me time while using their digital products?
Smooth BOPIS experience—If I Buy Online and Pick-up In Store, is this process easy and seamless?
Proactive communications and management—Do they save me future time by anticipating my next needs given my past purchase behavior?
These sub-drivers help us to determine how much time a brand saves its customers. It could be as simple as saving payment information or shipping addresses for quicker online checkout. Skipping lines by using a BOPIS experience or simply just knowing that one month after buying a particular product that most customers also buy this next thing, and making that purchase a one-click experience.
We are all short on time; if not in actuality, that is our perception. As brands like Starbucks let us skip lines and The Tractor Supply Company creates easy BOPIS experiences, customer begin to judge and measure all other brands by these experiences. They are paying particular attention to which brands value their time. They will shop these brands more often, and the price points will begin not to matter, if the total experience is terrible. It only takes one big brand to do this well, to put incredible pressure on everyone else, inside or outside their particular industry.
Another mode of generating (or compelling) loyalty is to create Access for members that either non-members or non-elite members (think “status” at an airline) can’t get. Sometimes creating exclusivity is critical when there is very limited space, as with airline travel; at others, it’s a two-way game where brands accent further self-segmentation for additional perks. Sometimes just logging into the app has small rewards that we all value so much.
Where we look to judge brands is executing on the below sub-drivers in proper ways. Brands don’t need to be clever or necessarily innovative, but the must understand what kinds of Access their customers need and expect.
In-store/on location—Does this brand provide special access to me as a member when I am at their location?
Exclusivity: Places—Does a brand allow me into exclusive places, such as an airport lounge?
Exclusivity: People/Events—Does this brand create Access to industry mavens, celebrities, and other luminaries and/or do they provide Access to exclusive events that only members get?
Exclusivity: Products—Are there products exclusive only to members or at certain levels of membership?
Lead Time—Does a brand provide members with lead time on the launch of new products (Apple Watch) or events (concerts) as a perk of membership?
Information/Intelligence/Data—Does the brand provide Access to meaningful information to help future customer behavior and decisions?
We find we are most often underwhelmed, across the board, with all brands in the Access category, especially with respect to lead time and information. These two sub-drivers are almost always under the command of the brand, but many don’t take the simple steps to provide its customers with feedback on their purchase behaviors or probably downstream needs given past purchases/activities.
If Content is King, then brands who invest in content—and not just Top Ten Best Whatevers This Week for X Industry nonsense, but actual content that people perceive to be useful—should also be king. So far, this hasn’t proven to be the case. Perhaps it is such that in present stages, many brands just aren’t to the phase yet where educating its customers is a bigger priority than other areas of the business. It’s also the case that not every brand needs to educate its customers, such as Starbucks or Zappos (we know how to drink, try on shoes). However, brands that connect you with an experience, such as outdoor retailers, airlines, car brands, and sports teams, have a lot of potential to create content that helps its customers have better experiences and use their products more effectively. We are judging brands specifically by how they are engaging in the following behaviors:
How to Use Products—Does the brand provide or create helpful how-to content for their customers AND do they make sure their customers are aware of this content?
How to Get the Most out of Products/Services—Are they helping customers get the most out of their purchases through content AND are they pushing this content to their customers?
How Professionals Use these Products/Services—Does this brand provide content with actual professions (e.g. Tony Hawk for a skateboard brand) using their products or services or just power users? And again, do they distribute this content properly.
Instructional/Advice/etc.—Does the provide any other advice or instructions that aren’t specifically about their products or services, but related to them. Ex, TREK shows how to fix a flat or re-gear a chain; Volvo show you how to parallel park.
Downstream/Iterations/Predictive—Does the brand connect what they sell and what I’ve purchased to other potential downstream behaviors or purchases in a way that is useful?
There are two main themes coming out of the Content/Learning category which is a) is the content helpful or useful, and not just content for the sake of checking the box on the content calendar; and b) does the brand actually distribute the content to its customers? We are often finding brands that either excel at A or B, but not both. You need both. No one needs well-distributed content that isn’t useful. And it’s not helpful to have good content that nobody can find. We all know plenty of brands who email the crap out of us with content we don’t want. Annnnd we can name a few brands who have some outstanding content that is buried on the back shelf and doesn’t follow with apropos purchases (ahem, REI).
The Recognition category, or what we refer to with clients as “Know Me”, is likely the Loyalty Driver that is core to all loyalty and overlaps with so many other drivers. It’s hard to save customers Time, if you don’t know who they are. Hard to give customers you don’t recognize Access to certain exclusive concepts. Recognizing your customer and acting accordingly is our charge to most brands. Few do it well. Those who do are lauded for their efforts.
When brands take a customer’s information, the customer is entering into a Data Value Exchange with the brand, wondering what they will get for risking their phone number or email address to yet another company. And we don’t just mean the blanket emails are addressed to your first name. That’s Day 1 stuff. We judge brands by how they use the data that their customers have provided them across their customer life cycle and turned it back into more value for the customer. These are the sub-drivers we are critiquing:
In-app—Do they store my payment information and do the know where I am while I’m in the app to connect me to a nearby store?
In-store—Are my rewards points and personal information available when in-store? As a loyalty member, am I actually recognized in store and provided with some measure of a white glove experience?
On-Website—Do they store my payment information for faster checkout? Do they have curated content or products based on my size or life situation (married, kids, dogs, etc)?
Individual Emails—Do they recognize the funnel of my experience, such as travel brands knowing where I am in my travel process or retail brands aware of the location of my product and its possible return at each step in the process?
Newsletter Blasts—Is this broad content at least segmented to recognize me through my purchase history or demographic information or is it just for everyone?
Store Memory—Do they store my purchase history over my lifetime as a customer? Is this history easy to find and does it still link to these products?
Philanthropic—Is their philanthropic work or likewise areas of the business just checking the foundation box or do these efforts recognize underserved customer segments with meaningful partnerships and work?
Every brand that has your information from a past purchase or interaction with them, has information they can act on. If you are a loyal or frequent customer, then brands have even more information. But are they acting on it in a meaningful way? We believe brands on the cutting edge will begin experimenting with more positive data value exchanges, and with the sensitivity these days around personal information, smart brands likely start by asking permission to curate content and products for them.
It is so expensive to acquire new customers. Ryan Howard told his boss, Michael Scott, that it’s 10 times more expensive to acquire a new customer than to keep an existing one (citation pending). The above are the present-day methods that brands are using to drive loyalty in their customer base and plug all the holes in the bucket.