The potential – and challenges – of using loyalty programs to engage consumes hasn’t just become a critical opportunity for customer experience leaders to pursue. It has now become the premise of the latest hit series on Netflix.
In ‘Pepsi, Where’s My Jet,’ viewers follow the story of John Leonard, who took the beverage maker at its word when it ran a sweepstakes in which the top prize was a Harrier fighter plane worth an estimated $23 million.
His unlikely win, and subsequent court battle, all centers around his strategic approach to buying and attempting to redeem Pepsi Points – the same loyalty program that rewarded customers with free products, VIP event tickets and more.
While CX leaders will no doubt recognize ‘Pepsi, Where’s My Jet’ for the cautionary tale that it is, they also can’t afford to dispense with loyalty programs. Instead, the ongoing pressure of the current economic climate will likely lead them to seek better ways to enhance and deepen customer loyalty.
“Loyalty punch cards have been around forever, but when you start to listen to customers who open your app three times a week or go into your store twice a month, those are the signals that you should be rewarding,” Tim Glomb, global head of content for marketing technology firm CM Group, told 360 Magazine.
Glomb cited a recent discussion he had with an executive at TGI Fridays, who pointed out that, despite brands’ best hopes, consumers don’t think of companies first when they’re deciding to invest in an experience. They first about what they want, such as the kind of food they’re in the mood to eat. Only then do they begin considering the possible brands that could provide to them. This is a common sense but sometimes overlooked aspect of loyalty.
“The brand where you’re getting rewarded is almost always the brand that you go to first, and that you’ll convince your spouse or your kids to go to,” he said. “Brands need to to focus on that experience of rewarding, listening and recognizing every action because otherwise, pretty soon it’s all going to be about price.”
Is there still a point to offering points?
Though recessionary forces might compel brands to double down on loyalty programs that focus on cost savings, they don’t necessarily have to develop their own version of Pepsi Points. Companies like San Diego-based Wildfire Systems offers a number of tools to embed social commerce, rewards and cashback offers into the customer journeys. However its VP of merchant development, Michelle Wood, said recent changes at Dunkin’ and Chipotle’s reward programs are examples of point accruals that are frequently subject to arbitrary, and sometimes wild swings in redemption value that make them worth less.
“In the future, points are likely to still be around, but changes like these can create the opposite of the desired effect,” Wood said. “They can actually make consumers desert a brand, so companies with a points-based approach should keep that in mind.”
As an alternative, Wood said brands can consider creating more flexibility for the consumer with their points, such as allowing them to redeem them at the point of purchase, converting them into cash, or turning the points into credits on an account. She also said multi-brand loyalty programs – where consumers can earn and redeem rewards or access exclusive promotions across different brands – can also offer enhanced flexibility for consumers.
Two examples of this type of program are the partnerships between Starbucks/Delta and Nike/Dick’s Sporting Goods, Wood added.
“Retail innovation will force brands to offer customers MORE incentives to drive sales in areas of priority for the brand,” said Spencer Kieboom, Founder and CEO of Pollen Returns, an Atlanta-based firm which optimizes existing inventory through return pickups for retailers to leverage their existing product.
Kieboom recommended CX leaders explore incentivizing customers and building loyalty in less conventional ways. Some of his ideas included offering added dollar value for exchanging a product versus returning, rewarding them for downloading a brand app, or purchasing goods previously left in their e-commerce shopping carts.
“It’s about providing providing solutions that accommodate consumer feedback,” he said, such as the fact that the vast majority of consumers have had a negative experience returning a product.
Brand executives like Aviad Faruz are carefully watching what large players are doing to develop the best approach to loyalty. As the CEO of personalized jewelry and gift company Faruzo New York, Faruz cited Amazon, Sephora and Starbucks as role models in building customer loyalty.
“Their successful approach involves offering a wide variety of rewards that cater to individual needs and preferences, as well as providing a high level of personalized service,” he said. “Brands can make their loyalty programs feel less transactional and more human/personalized for every customer by offering unique experiences and rewards that are relevant to each individual.”
Loyalty drivers beyond cost savings
The problem, of course, is that loyal programs become siloed within marketing departments and fail to be informed by a wider variety of business functions. That’s been one of the conclusions for Johan Liljeros, senior commerce advisor at Sweden’s Avensia, who has helped a number of brands in this area.
“What you need to do to build really good loyalty is to have it as a company wide. company wide initiative,” he said. “It will involve everything from sales, marketing, customer service – especially customer service – technology and even your supply chain partners.”
Brands that engage a wider group of stakeholders may come to the conclusion that the potential to boost loyalty isn’t limited to saving customers money. A good example is when companies put a greater focus on sustainability in the way they produce their products.
“It’s not just Generation Z – for most generations today, we’re seeing that they would rather buy from someone where material been sourced in the right way,” he said. “Usually points and membership perks come very low down on that ladder for what customers value.”
Ryan Turner, founder at Ecommerce Intelligence, suggested a genuine approach to personalization could also be considered as a loyalty program, provided it came with the right rewards. Brands could offer VIP-only sales and promotions, for example, free gifts which are not available to purchase, in-person event invitations, and closed customer-only communities.
“The idea is to make customers feel as though they’re inside some kind of insiders club where they truly have unique access to a brand, and have the digital red carpet rolled out for them,” he said.
Glomb said loyalty should also involve responding to feedback as much as coming up with programs or offers out of the blue. This is a time to have the richest conversations with customers as possible to build the right experiences.
“Don’t ask somebody, ‘Oh, hey, where do you where do you vacation,’ and then put it on a shelf and never act on it. Give them a coupon or suggest the next product that they need based on their answer,” he said. “Trust isn’t there from day one, and I think you build trust by asking the right questions.”
Shane Schick tells stories that help people innovate, and to manage the change innovation brings. He is the former Editor-in-Chief of Marketing magazine and has also been Vice-President, Content & Community (Editor-in-Chief), at IT World Canada, a technology columnist with the Globe and Mail and Yahoo Canada and is the founding editor of ITBusiness.ca. Shane has been recognized for journalistic excellence by the Canadian Advanced Technology Alliance and the Canadian Online Publishing Awards.