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As loyalty goes in and out of fashion, brands must not only deliver on their promises but also develop a genuine interest in the customer, constantly finding new ways to forge a stronger relationship and overall brand experience, according to Sarah Cross, managing director for the UK-based customer loyalty consultancy Uber.
There is, Cross says, a consumer-driven need for a two way conversation with brands, so marketers must combine their customer data and insights with social media, mobile technologies, and personalised communications to more actively engage the customer in relevant ways.
The idea that loyalty must always mean having a points-based programme, with catalogues of rewards to be exchanged for those hard-earned points, should be challenged. Quite often these programmes have no instant or relevant value, and merely promise that, if customers spend more, they'll get to choose a new electrical item or get a free flight for their 'loyalty'.
But today's consumers are smarter than before, and they expect more in return for their loyalty. Marketers therefore need to give customers more of what they need and want. For example, better service, relevant and genuinely personalised communications, and something a little more innovative than "points mean prizes".
But point programmes do have their place in the market, many brands - and even whole sectors - could be better served by a 'brand club', which Uber defines as "a virtual community of customers who feel they have an individual relationship with the brand".
Through personalisation, relevant and regular communications using different media channels, and a huge element of 'surprise and delight', brand club members tend to feel included - part of something bigger than a rather impersonal points programme. Brand clubs talk to customers about more than the latest special offers: they enhance the member's everyday life through helpful advice, tips, knowledge and rewards.
There is of course a certain amount of give and take in the relationship (i.e. "You do this for us and we'll reward you with that", but there are also higher value 'feel good' factors (which Uber calls "random acts of kindness") in which customers are sent gifts, communications and even simple thank-you messages for showing highly loyal behaviour.
Segmentation should be carried out to identify customers by their visit and spend patterns, and different random acts of kindness defined and delivered to an agreed amount of customers in each segment - and all should come as a surprise to the customer, so there must be no way of customers coming to expect such acts of kindness.
As a result, customers tend to demonstrate a higher level of engagement with the brand, as well as shouting about the random act of kindness to all of their friends. This in turn creates a viral effect for the brand club, especially if the brand can create some exclusivity and make high value customers feel like real VIPs.
Businesses can still drive behaviour and measure the success of loyalty programmes and CRM plans without using points. One benefit of a brand club is that it is often much more cost effective than points-based loyalty marketing, and it can still allow the brand to concentrate its marketing spend in the right areas.
Uber recommends that companies adopting this strategy should take an adaptive approach rather than trying to stick to a hard-and-fast plan. This means constant testing and learning, and allows the brand to react faster to competition and changing customer needs. Start with no more than a three month plan, to allow evaluation of different communications, channels, rewards, and random acts of kindness. This will provide insights about what works for each segment, and will help to keep the programme fresh and relevant to the consumer.
And if there are channel partners involved in the sales process, make sure they're included - and most importantly involve their staff in the programme as well. If they are the brand's main customer touch point, it is imperative that they speak passionately about the brand, as well as the brand club or loyalty programme.
Another effective customer engagement technique that ties in well with brand clubs and loyalty programmes is to reach out to customers outside of the brand experience by forging partnerships with relevant non-competing brands and companies that can either save customers money or enhance their lifestyles by providing extra luxuries or other "money can't buy" experiences.
Finally, internal awareness of any customer engagement programme is crucial. First, it creates strong internal PR for the loyalty programme (which is surprisingly often misunderstood by employees). Second, a successful loyalty strategy is reliant upon the business aligning all of its functions behind a common goal. Overall, this enhances the customer experience because a dedicated loyalty project team provides a forum for all other departments to provide input and feedback for the strategy.
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