Loyalty–Not Just Punch Cards Anymore

Loyalty.  Is it a punch card? Is it a free airline ticket? Is it a deep affinity? And how did business hijack this sentiment and turn the emotional definition of loyalty into behavior?

I was attracted to a tweet by Liz Strauss, brand strategist and leadership trainer extraordinaire (@lizstrauss), on loyalty marketing.  Her tweet linked to an interview by Carol Roth (http://bit.ly/hAkc44), one of the speakers at the upcoming SOBCon (Successful Online Business Conference) in Chicago.  Liz was kind enough to fill me in on the event, which she founded, and it’s emphasis this year on Loyalty Marketing.

The interaction started me thinking about loyalty and business loyalty programs.  Carol Roth pointed out in her interview that frequent buyer programs today reward behavior, not loyalty to a product or service.  When the better, cheaper alternative comes along, people switch their “loyalty,” or purchase behavior to the new competitor.

Back to the Old Days

During my marketing career, I’ve seen this evolution of attempts to “create” loyalty among customers and have seen it evolve dramatically.  Once upon a time, commodity brands like detergent and soap tried to maintain loyalty by including a free towel in the detergent box or giving away glassware at gas stations.  (Think about a free gift with gasoline purchase–wow–has the world changed!) 

The free gift-with-purchase concept kept consumers “loyal” until they got a full set of towels or a full set of toys or other gift.  This concept morphed slightly into pantry loading, as soap companies gave a free bar if a customer bought a banded set of 3-4  soap bars–effectively keeping the customer from buying competitive products for a long period of time.

Today, the punch card programs and frequent buyer points are effectively the same types of programs with a longer timeline: free gift with multiple purchase.  Disclaimer time: I worked for American Airlines in the early days of the AAdvantage program, when the  introduction of technology to track mileage really was a great benefit to the customer, while the prize of a free airline trip dramatically upped the ante of free gifts.

The change began…

Technology continued to stoke the evolution of loyalty programs when companies like amazon shifted from trying to sell more bulk product to trying to understand the customer.  By tracking purchases and using that history to make recommendations on other like items, marketers started targeting on an individual, rather than group basis.

Loyalty has evolved to experiences, community, and content

Carol Roth points out in her interview that traditional loyalty programs cater to “spenders” not “senders.”  Senders refers to influencers and connectors.  Once again, word-of-mouth trumps all other marketing tools, if you can harness it.  She cites programs like the Harley-Davidson owners club, where like-minded individuals participate in rides and other experiences specific to this audience.  Clubs for collectible doll owners create community, and loyalty, to this niche.  What if you provide a service?  Then offering content is a way to win loyalty from your customers. 

Bottom Line

A brand needs to earn loyalty.  As Liz Strauss mentioned, loyalty is not bribery.  It comes down to the basics: your product or service must have a point-of-difference, create value for the customer and/or solve a problem.  When a customer believes that she and the company both care about each other, rather than just the financial bottom line, then true loyalty flourishes.

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