Most Loyalty Programs Are Lazy.

By: Ray Chelstowski

Most customer loyalty programs aren’t about loyalty at all. They have more to do with a commercial transaction than with a consumer’s true affinity for a brand. True loyalty is emotional and leads to customers feeling like they’re part of something exclusive. The best membership strategies, which trade on social capital and personalization, are designed for them.

People take pleasure in the intimacy of consuming together and interacting with a like-minded community. When the brands themselves are organizing that “club” — and offering access to new product drops and events, more hands-on service or even the smallest of perks — the experience gets even better. At Kognitiv we have seen that first-hand managing the Wheel Watcher’s Club for the daily syndicated game show, Wheel of Fortune. This brings dedicated viewers even deeper into the game experience with exclusive access and opportunities that change daily. Members feel more connected to the show and each other through the club’s unique construct.

It’s also important to recognize that membership can be “micro”, allowing brands to focus on specific customer sub-segments and overdeliver for them. This form of personalization works particularly well for brands that can be commodified. For example, IKEA recently released a line of furniture specifically for its gaming community. Adidas Creators Club is a membership program that gives select customers access to “the best of Adidas,” like vouchers, discounts, and free shipping.

Most importantly, membership requires steady maintenance, an ability to be nimble and adapt in the moment. Research shows that consumers prefer small, repeated gains and incremental rewards over big infrequent ones. So, membership programs need to offer a steady stream of touchpoints. At Kognitiv we have found that that becomes more compelling when a brand is able to reward their most loyal consumers with offerings that are provided by non-competitive peers. That allows for members to receive personalized incentives and rewards more frequently, and this keeps things fresh and dynamic.

Loyalty programs — those that simply bribe people into buying more of your products — are lazy. In the modern economy, people develop true brand affinity only when it gives them a sense of being part of something special. Done right, membership strategies that offer personalization, collaboration, and community are an effective way to achieve that goal.

ray.chelstowski@kognitiv.com

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