The Ten Rules of Loyalty Marketing You Did Not Know You Needed

We are talking to you, brand people!

By Frank Pagano, Sr Partner @ Jakala, Shareholder @ Tokenance, Contributor @ Il Sole 24 Ore

You may think of loyalty marketing as old school. Yes, it manifests itself as the usual collection of points or the reach for the platinum tier. Yes, most points are being left unused, representing a strong liability on a company’s P&L. Think again. Think better. Loyalty is fundamental to any brand’s performance, if done right. Here are some rules or tricks, which may help you step up your game.

Nobody cares about you.

The time people spend on your brand is minuscule, and we are being optimistic. It’s tough, I know. But that’s life. It is, indeed, the fact that people do have a life, which drives the number one insight about loyalty marketing: it’s a long game. It takes time to have someone purchase you, and you need to advertise to be visible. What do you need to say? A long-term dialogue is effective if people’s needs and interests are the only measure of all marketing efforts that you put out there. Shoppers don’t think about your category unless they are in the market for it. When they do, make sure you only talk about how you can serve them.

So what? Advertising is key, and it needs to be consumer centered.

You will never turn 100% of your fans ‘on’.

Average loyalty, measured as the % of a user-base that does at least one action over the course of a year, runs at approximately 30%, if you are good. A natural desire of any brand manager is to enlarge that number. “If only another third of my users would buy me just one more time this year”, you may think: that’s not going to happen. The current abundance of messages across social and classic media has overwhelmed the man on the street, and created a vast majority of passive, silent and indifferent consumers. You are better off creating a smaller slice of super fans: make them obsessed with great quality and service, so they will become your best ambassadors. An extremely engaged 5%, for example, is enough to drive top and bottom-line performance for a full year.

So what? Turn your best fans into ‘advocates’ with greatness (zero compromises), and you will reap the benefit of their exponential amplifying power.

More of your product is better than a toaster.

The #1 reward for fans is usually more of the product and services that they need. This is why apple is giving people a generous 3% daily cash back in apple stuff. Railway brands, for example, see their fans using points for more travel. The same goes for miles, which are used up mainly for flights. Chances are few people will care about a toaster, even if it is branded. Personalization is key. The perfect loyalty catalogue needs to be dynamic and hyper-personalized, so that you move your fans from the functional to the inspirational zone, from utility to delight.

So what? Hyper-personalization of rewards is fundamental, on top of a solid cash-back scheme.

It’s all about conversation.

How can I personalize my loyalty programs, you may ask? Technology can help. Artificial intelligence, for example, can transform your loyalty scheme from static to conversational, to inform (FAQ & rules of engagement), support (track progress & prompt action) and interact (daily challenges) with your fans. You don’t really know what a specific fan wants, until you ask them. We did not have the technological capabilities to do that, at a granular level, until generative AI came into the picture. We are now able to inform, support and interact with everyone, making our loyalty program feel like it was designed for each and one of our consumers. Technology makes you reactive and proactive. It makes you a good listener and smooth talker, picking up even the invisible signals of an early engagement of your prospects.

So what? AI is your enabler and your fan’s best friend. Let them talk.

Carpe diem! The rise of instant rewards.

Fans will not stick with you for years, just because they voted for you once. Those days are over. Social media changed us forever. We want ‘it’ now. Work on daily challenges, quizzes, sweepstakes, games, lucky strikes, which can capture people’s attention, while giving them instant gratification. Marketing needs to be personalized, yes, but it must be fun. The goosebump of a Tuesday lottery to win Las Vegas goes on top of that collection to get a set of wine glasses, which will impress your in-laws. Instant rewards are also your way out of the loyalty riddle, in case you sell non frequent products (like a car): yes, loyalty programs can trigger the ‘one’ purchase, because it’s not only about purchasing an object per se. You can build added services, which make the difference (car wash, fixes, guaranteed residual value), keeping the dialogue and your door always open.

So what? Build two tempos in your loyalty marketing. Short (now) and long. Fast and slow.

It’s data collection, on top of selling & ROI.

Yes, it is about selling more of what you manufacture. And it’s not, at the same time. Tell your CFO to ‘shut up’, at least until they hear this. Talking to fans is a fantastic opportunity to get to know more about them. Data collection and enrichment is as important as selling more trombones. How can you sell more trombones, as a matter of fact, if you don’t know the needs of those who bought you already? Starbucks sells beverages every single day. And they don’t. They also own the largest database of premium drinkers in the world: their stomach, heart and mind are equally thirsty.

So what? Talk, collect and exchange, so that you can serve your fans better and better.

They will never walk the funnel.

The step by step walk down your consumer funnel will never happen the way you draw it on PowerPoint, or the way you presented it to the Board of Directors. Fans will encounter your communication efforts in a random and fragmented fashion. Make sure you are ready to tell them the whole story, at every touch point, and fast. Don’t assume that they know or remember you. Nobody cares about you (rule #1). Get your 30 seconds’ pitch ready at whichever level of the journey. It’s a speed date. Make sure you are distinctive, consistent, and honest.

So what? Share why you are different, in seconds. Make sure it is true. Say it consistently across your touch points.

Fans don’t want infinite choice.

Fans chase utility, more than they want unlimited freedom. Loyalty marketing builds functional and useful solutions first. Infinite choice means a long tail of unused rewards, which will please the few who pay attention to the fine prints. If you are selling flights, chances are your fans will also look for a hotel and some car rental services, let alone a romantic dinner. Your catalogue needs to be sharp; not necessarily and simply a long one. Work on strategic alliances, starting from who you are. If people travel to Vienna, it’s not a given that they are collecting points to buy a Steinway piano. Work on the immediate vicinity of what could be the greatest service you can give them around their round trip to some well-deserved time off.

So what? Your catalogue is not a list. More is not necessarily better.

Fans are not loyal.

Let’s pay homage to Prof. Byron Sharp’s work. As consumers, we are not loyal. We are just following the mental and physical availability of a product and service, once we are in the market for something. When we need to make a purchase, especially if it’s a routine purchase, like our grocery, we want to invest as little time and effort as possible. There is no certainty that fans will choose you, just because they bought you in the past. Build distinctive brand assets, increase mental and physical availability, and users will start buying you more often.

So what? Loyalty marketing is secondary to the imperative to be there, in spirit and flesh, via long term brand equity marketing and perfect execution is store.

Fans own the brand.

Anyways, whose brand are we talking about? You don’t own your brand. You never did. Every single fan of yours has their own perception about you and got into your category from a very different angle. You sell kitchenware? Understanding why your customers buy you is a never-ending process. You need to be smart. And lazy, in a way. Let consumers help you understand and finesse what you can do for them. Use technology, make sense of the data you collect, find patterns out of what’s going on in your database. If there is something you don’t know or need to verify, talk to your fans, feature them, celebrate them. Let them run your show. You are a DTC airline, and they use you to fly to London to shop? Make sure you get them there on time. And, if they allow you, be on their side, to make their experience unique and memorable, serving them a glass of French champagne at the VIP lounge, as they wait to go back home after an epic weekend. Hire the brand’s true owners: the big spenders, the loud and proud evangelists, the smart socialites, the brainy and fun creators, the honeymooners, the family planning heroes, the fair feed-backers, and the sick consiglieres. You are the concierge of someone else’s owner suite.

So what? You are going to be surprised. Fans are ready to help you if you let them.

What are your thoughts? What are your golden rules to engage your brand lovers? 

GET IN TOUCH
Got a Question? We’ve Got Answers.