The (Overdue) Evolution of Loyalty

 

By: Ray Chelstowski / Hilton Barbour

The notion of enticing consumers to try your product and rewarding them for their continued patronage is not a new one. Savvy business leaders have been using various tactics and programs for decades to augment their acquisition efforts as well as build meaningful rewards that retain customers.

The sad reality is that many of these programs have lost their luster and the level of innovation inside these programs hasn’t kept up with the heightened expectations of today’s consumers. A “sea of sameness” has led to dwindling consumer participation and, despite the enormous passion and effort that loyalty marketers put into these initiatives, few of these programs deliver the type of business impact they once did.

Here’s a stark reminder, on average a North American customer is part of 14.8 loyalty programs but only active in 6.7 of them. And even that definition of “active” might not be enough to continue to support and fund these programs out of the topline revenue of an organization.

The Why we do it rationale and conviction that drives these loyalty efforts hasn’t faltered.

It is the How we do it that needs a serious evolution to continue to capture the interest, participation, and passion of our consumers in a way it once did.

One area that has enormous potential is the increased use of zero-party data. That’s data given willingly (even eagerly) by consumers to augment your knowledge about their real aspirations, intentions, and passions. Unlike many of our traditional data schema (now about to go the way of the dodo as 3^rd Party cookies get expunged) which inferred future behaviors based on past activities, zero-party data is essentially the consumer telling us explicitly. While that sounds like Nirvana for loyalty marketers, that sweet sweet data is only going to accrue to organizations who do something meaningful and create truly personalized rewards with it. (Hint – that means more than getting their gender right in a mailer) 

At Kognitiv we focus on gathering zero-party data as a means of, collectively and collaboratively, deepening the knowledge of those critical loyal customers our clients are seeking. When the data gathered by multiple, non-competitive brands is pulled together a remarkably complete user ID is created and the kind of collaboration that can occur between brands allows for offers and incentives to be more insightful, more personalized and have more impact.

Better data alone is not the solve.

Creating more insightful – even more human – programs is how loyalty is earned and kept.

Outdoor adventure retailer Patagonia is an excellent example. They understand the deep personal values that are important to their customers around themes like sustainability. By ensuring their content and corporate efforts have a credible sustainability outcome, customers are reassured that it values waste reduction, is committed to a low carbon footprint, promotes recycling and reusing items, and gives back to the restoration of the environment as much as they do. Loyalty programs that go further to promote shared values and community are infinitely more likely to gain the attention, and participation, of customers who care deeply about the same things you do.

To evolve your program ask yourself, what do we genuinely care about that might strengthen the bonds we have with customers who share those values and convictions?

A regular Starbucks offers over 170,000 ways to customize your beverage. A Coca-Cola Freestyle machine offers a meager 127. They both highlight the expectation of flexibility and personalization that is table stakes for most customers today. Enabling point flexibility is another overdue evolution of  the loyalty landscape. While currency or points are probably the epitome of traditional/transactional loyalty, new technologies are enabling a more flexible use case that benefits customers who yearn for new types of rewards. Inside the collaborative ecosystem we operate at Kognitiv, organizations can work directly with peers they’d never have dreamed of accessing, let alone partnering with, in the previous traditional partnership models. Those collaborations allow for more nimble and varied reward scenarios and for access to new consumer groups that are the lifeblood of any loyalty growth strategy.

While we don’t envision a world where the traditional, and well-tested, constructs of loyalty will die out, there are several new operations technologies and business models that are evolving the impact loyalty programs can have. They replace the “sea of sameness” with an unparalleled distinctiveness. They replace tired and lack-luster reward constructs with innovative and unexpected offers. Most importantly, they leverage new types of data – like zero-party data – to build more insightful and resonate relationships with your customers.

Isn’t that the type of evolution you want to be part of?

ray.chelstowski@kognitiv.com

hilton.barbour@kognitiv.com