Why doesn’t Loyalty get as much love?
Article by Christopher Ross, President EMEA – Collinson Group
Brands are built with great creativity and consideration. From guidelines to guardians, they’re carefully crafted, policed and nurtured. I should know, because I spent the past 30 some years working in Global Advertising Agencies. No matter which part of the world I worked in, a universal truth was the fervent passion of agencies to really understand the brands they were helping to build. Creativity can be the unfair advantage that applied skilfully can help solve clients’ business problems. A good agency partner takes that responsibility very seriously.
Having a career obsession with the art and science of brand loyalty and having spent the last 20 years on ‘Madison Avenue,’ it seemed a fascinating transition to take a role that included operating at the heart of the loyalty eco-system.
My biggest surprise was the sudden lack of conversation around the brand when it came to loyalty programmes. Was the role of the brand not seen as integral to loyalty and vice versa? In this world of catch and release, were marketers more interested in chasing down new customers than getting closer to their existing base? Surely every conversation around loyalty should be inextricably linked to the consumer and brand?
Marketers realise the long-term value in building brand equity. But why are so many loyalty schemes viewed as mere support acts to the main attraction? Faded and jaded afterthoughts, a forgotten pile up of points, miles, discounts and discarded cards. Unloved and unused programmes which could be creating and keeping the devotees so crucial to recurring revenues.
As much as marketers posture about brand differentiation, this promise needs to be brought tangibly to life, in the hands of the consumer, via a brand aligned loyalty programme. Capable of creating brand differentiation, category leadership and revenue increases from share-shift, cross-sell and upsell, the loyalty programme cannot just be a boring bolt-on. Loyalty and retention should be the beating heart of the brand, part of its DNA. Yet all too often the brand is the star shining on stage with loyalty skulking behind the scenes.
Why this obsessive focus on acquisition? We’ve all heard it costs more to acquire than to keep a customer – at least 5 x and maybe more depending on the source and sector. So why so much emphasis on acquisition relative to retention? How many marketers support loyalty activities with a fair share of the marketing wallet?
And why don’t more programmes leverage the power of data and personalisation, with segmented offers reflecting the different ways customers choose to interact with the same brand? Or better still, talk to people 1:1, with data driving personalised comms designed to build recognition and relevance as well as revenue? Yes, good data and privacy protocols are needed first but these should be part of any company’s ‘brilliant basics’ – firm foundations upon which to build outstanding loyalty schemes.
Given all of this, think of the underwhelmed consumers experiencing the sea of mediocrity out there. Thousands of unengaged, uninspired members have signed up to programmes they no longer care about. Look through your wallet (digital or otherwise) at your membership cards. You could probably throw half away and not even notice next week! The average consumer belongs to 14.8 loyalty programmes (Bond Loyalty Report) but is active in less than half of them. And who can blame them? Lives are busy. Lethargic programmes lose.
In April and May 2022, Collinson undertook research to look at the future of loyalty, garnering responses from businesses and consumers respectively. Only 45% of business respondents stated that their brand and loyalty programme are connected and co-operate closely. It is concerning that under half of the companies surveyed recognise that their loyalty programme can actually bring the brand promise to life. Collinson has long argued that loyalty programmes should sit at the heart of brands, providing differentiation alongside many other benefits which transcend the scheme itself. In the same research, 82% of business respondents and 85% of consumer respondents agreed with the statement ‘a loyalty programme helps a business to stand out against their competitors.’ So its ability to differentiate is widely recognised. It’s the close link with brand that’s the big missed opportunity. Essentially, customers need to ‘love loyalty’ and brands need to love customers back.
So how do you make sure that your loyalty programme stands out as a brand beacon, creating both remarkable relationships and robust returns?
View your loyalty programme as a key strategic pillar, invest your best planning and creative minds in it and ensure it’s based on keen consumer insight. Then build it so it sits at the heart of your brand and business, sharing the same values and creating emotional connection.
Granted, this takes time and careful crafting but with attention paid to three important principles, building a loyalty programme that has a symbiotic relationship with your brand is possible.
The first of these principles is to recognise the might of insight. Put your customers on a pedestal. What’s their behaviour and what do they love about your brand? You’ll likely find that purpose, community and sustainability play a greater role than ever given macro events and growing eco-awareness. In a nutshell, listen and leverage the elements of your brand which inspire your customers’ love and devotion.
Of equal importance is the development of a powerful proposition and the underlying value exchange. What are you asking for in return for rewards? Can you create a killer proposition which harnesses the brand’s assets to create emotional connection? A whopping 77% of programmes based on transactional behaviours alone failed within two years in Capgemini research. Successful loyalty schemes play a role which goes far beyond function; they create relationships, experiences and emotional connections.
Finally, to be at the beating heart of your brand, any loyalty programme must live and breathe the brand values and these need to be baked in, not just sprinkled on afterwards. The strongest loyalty schemes are those that you simply know belong to a specific brand, even without seeing a logo lock-up – because they are one and the same, designed with shared DNA.
A great challenge for your partners and internal teams is to assess the current connection between brand and loyalty in your business and see how closer connections can be forged. Once you achieve this, your loyalty programme will transcend boundaries, becoming a brand asset in itself, paying into brand and supporting the creation of long term brand equity as well as sustaining loyalty.
If you’d like to set up or optimise your scheme using the ‘might of insight’ as suggested above, our research looking at the future of loyalty is a great place to start. It’s a free resource providing cues and clues on the gaps and opportunities that exist for companies creating best in class schemes, where customer-centricity, killer propositions and the power of brand all go hand in hand.