Saturated Loyalty

Published On November 30, 2009 | By mbalogh | Blog

Lately I’ve been hearing a lot about loyalty programs, their goals, and their objectives so it’s got me thinking about loyalty in the age of new media marketing.  Traditionally loyalty has been about repeat business — getting happy customers to come back — however, in the age of information, optimization, and saturation, I see it going a different way.

Friend #1 is a coffee drinker.  Sure most of us drink coffee but few of us do it as a hobby so, when I say she’s a "coffee drinker", what I really mean is she’s a very particular coffee snob who knows exactly what she wants in a cup of joe and is delighted when she gets it.  Few things make her day better then a good cup of coffee so you’d better believe she knows exactly where to get one.

Friend #1 needs very little encouragement to come back for another cup of coffee.  Enrolling her in a traditional loyalty program is actually bad business because she’s going to come back anyway.  You’re lowering revenue to reward her for doing what she’d do anyway — drink an excellent cup of coffee.  In her world she’s not loyal to you at all; she’s loyal to the coffee you serve.  She’s your customer because you loyally server her needs.  The relationship requires your loyalty to her, not the other way around.  If you stop serving good coffee it won’t matter how many holes are punched in her member card.  She’s already optimized her time and budget.  She can’t possibly drink another cup.  She’s saturated.  So now it’s time to ask yourself, how can we take this relationship to the next level?

Friend #2 is a business traveler.  She travels *a lot* for business.  By plane, by car, hotel stays, restaurants, the complete gamut.  Week-to-week, month-to-month, she’s "on the road".  Friend #2 also needs very little encouragement to come back, because she has to — it’s her job.  Her loyalty program is her company paying her to travel.  If they’re not paying her, she’s not traveling.  She needs no encouragement from you to travel more because, in fact, her goal is to travel less.  Once again, all your traditional loyalty program is doing is pulling money out of your own pocket.  She can’t or won’t travel any more than she already does and in this economic climate her travel choices are 80% her company’s budget and only 20% her convenience.  She’s saturated.  So, again, now it’s time to figure out how to take this relationship to the next level.

New media is not about controlling the message or changing the behavior of the consumer.  It’s about understanding the behavior of the consumer and facilitating their message to others.  The consumer life-cycle jump between customer and repeat-customer has been replaced with the conversion from customer to advocate.  Control is traditional, relationships are current.

You’re not going to get friend #2 to travel when she doesn’t have to.  This is her behavior — how can you use it?  How about encouraging her to give away her loyalty rewards?  Create a new loyalty program that benefits friends and family.  She’s already saturated with loyalty, but her friends and family are not.  They still think travel is fun and exotic.  Facilitate her to benefiting them.  It will make her happier to serve her friends and make her friends happier and more loyal to you.

Friend #1 is passionate about coffee so the jump to advocate is not a far one.  This is her behavior — what can you do to energize and facilitate your already passionate customers?  In this case enabling free wi-fi was a great start, but encouraging them to use it for your benefit is the next step.  Engage them to utilize their social network.  Encourage them to let their friends know where they are, what they’re doing, and the joy it’s bringing them by utilizing twitter, facebook, and other social networks.  Friend them and add benefits to spreading the word when they use these tools — maybe bonus points when they tweet your promo code of the day.  Take a lesson from friend #2’s industry and reward her for bringing a friend — buy multiple cups at once and receive bonus recognition.  Encourage her office, who currently purchases coffee in a disparate manner, to organize and designate a coffee buyer.  Facilitate by allowing them all to order and pay online with a single designated pick-up person.  Same behavior, she still gets her coffee, but now you’ve got new loyal business.

Today’s new media is about the social network — your’s and your cusomers’ — so engaging them directly is only the first step.  Rethink your loyalty programs to encourage and facilitate them engaging theirs.  That’s where the real power of new media is.

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2 Responses to Saturated Loyalty

  1. Karen Jacobson says:

    I would love to brainstorm with you regarding the option for the loyalty program for the coffee drinker. I agree that loyalty programs need a makeover, and you bring up a good point that they may not be encouraging repeat business anyway. In fact, in my case, I believe that the loyalty programs I participate in are provoking the opposite reaction in me. From a consumer perspective, I am finding that my current programs are either too complicated or misleading, and, (I must add for any companies who might be reading this out there), are actually dissuading me from using the services again! Take my BabiesRUs “loyalty” program that sends me “Rewards Bucks” in the form of a coupon in the mail. The catch? These “Rewards Bucks” usually expire within the week I receive them. That means either a trip to the store within the next few days (inconvenient), or the inevitable feeling that I wasted money (not really what Babies R Us was hoping for, I am guessing!). Then there is my Brooks Brothers Corporate discount card, which I proudly presented to the cashier during my last trip to the Short Hills mall. The cashier glanced down her glasses at my shiny blue card and stated that the card would not be necessary because the store was running a special that day which gave all customers my special 15% discount. Huh? As I tucked my card back into my wallet, I couldn’t help but feel that I was, in fact, not special at all. I was just like everyone else. Was that the intention of the Brooks Brother’s marketing team when they thought up their loyalty program? How about Subway who discontinued their promotion prior to my free sandwich? Or Express whose program is so complicated that I have literally spent 20 minutes standing in the store with an armful of clothes trying to calculate my prospective savings (Buy 2 shirts get 1 free/Spend $80 get 20% off/Buy one item get the next (equal or lesser value) 50% off) that I ended up leaving (yes, LEAVING without buying) because I was so frustrated. Please take note that I have a bachelors degree in Mathematics. In short, to all the companies out there, please stop attacking me with your loyalty programs or I just might never shop with you again!

  2. For the most part I agree with your basic premise. I would caution you, however, to not overlook the element of personal service to you equation of loyalty. Loyalty isn’t just about the product (coffee in this case). Loyalty is about the total Experience of which the product is simply one element. Other elements that factor into the equation are Energy – the effort it takes to acquire and use the product. Is it convenient to do so or do I have to drive across town to get my coffee? Equity – how do I feel overall about the brand? Are the brand’s values and identity consistent with my own? For example, does the brand make an effort to be “green”, something that is very important to me? And there is the Product itself and of course Price. Both of these must be consistent with the consumers frame of reference or “loyalty” won’t happen. Oftentimes loyalty is confused with satisfaction. A person can be satisfied but not the least bit loyal. Loyalty is a state of mind. Loyalty is not simply a hole-punch on a card.

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