• Megan Dado

CASHBACK AND POINTS ARE DEAD

Updated: Jul 5

Emotion is the new customer loyalty program.

“2019 is the year that brands begin thinking about customer loyalty in every interaction”    Christine Bardwell, Senior Principal Product Manager, Oracle Loyalty Cloud

I suspect the title of this article is making some of you tense and anxious.  These legacy loyalty programs have been a cornerstone for countless retail, grocery, and financial organizations. They’ve become such a standard in how we as consumers interact with these day-to-day brands, that their validity is rarely questioned. But it’s that normalcy that’s now threatening the success of these programs.

Consumers’ expectations have adapted and expanded, and as the Millennial generation becomes the primary group influencing economic habits, one thing is glaringly clear: the ultimate customer loyalty program is emotion—that is, connecting consumers to your brand through value and an emotion-centric promise that resonates deeply.

For companies who haven’t approached customer loyalty through this lens, this perspective can be jarring. But, it’s an opportunity to not only get to the heart (pun intended) of what drives your customers, which will ultimately help drive innovation in your business.

Consider these stats around customer loyalty for 2019:

1/3 of those ages 23-38 are quick to drop a brand that doesn’t meet expectations Consumer expectations for trust increased across all product and service categories and brands by an average of 250% year-over-year

The top 10% of your customer base (your most loyal customers) is spending 3X more than your average customer. In a study of over 100K consumers, Motista found that customers who are emotionally connected with a brand have a lifetime value that's 306% higher than the average customer.

We’re all consumers. So, consider your own purchasing behaviors. Think about the brands you covet and the ones you avoid. What does that brand mean to you? Why does their offering resonate?  Do they represent a lifestyle you live, a cause you support, or much aspired element of life? Chances are yes. And, if they don’t, I’d dare say you wish you were a customer of a company that did.   

Two companies I worked with over the past few years that had tapped into the emotion of customer loyalty are Staples and the footwear company, Toms. Staples’ Boston Offices had initiated a concept that allowed customers buying with corporate budgets to take their own impact-focused programs and have a say in how their office supplies and furniture were being delivered. Whether it was a low emission transportation option, all the way to the product manufacturing method. The customers felt they had a real stake and impact, leading to strong brand loyalty.

The story of Toms is a household tale at this point. They made the buy-one, give-one concept famous when they launched back in 2006, donating a pair of shoes for every pair they sold. And, true to their own values, they’ve now adapted the model to suit the current political and economic climate and ultimately what is meaningful to their customers. The new direction for giving, launched this past May, lets consumers support a cause of their choice: safe water, ending gun violence, homelessness, mental health, or equality.

“As we continue to innovate, we hope that people follow as well. And I hope, collectively, that purpose-driven companies are always questioning, are we having the greatest impact possible?”

Amy Smith, the chief giving officer for Toms.

The customer has changed. So has the world. And, so have we. After all, we’re all customers.  By understanding that loyalty is rooted deeply in emotion, companies can aspire to build the type of relationships they want and need with their buyers: lasting ones.

THREE TAKEAWAYS TO BUILD AN EMOTION-CENTRIC CUSTOMER LOYALTY PROGRAM

  1. Identify Your Consumers Emotional Attachment: Document your company’s values. What does your business help your consumer achieve?  A desired lifestyle? An experience to enrich their life? Supporting a cause they feel strongly about? How can you connect that with the customer journey?

  2. Test Your Theory: How well do you know your current customers and what keeps your top 10% loyal? Consider creating a customer feedback survey to find out. Talk to your customers at sale to find out. Test ad copy representing different messaging to see what gets better responses.  The options are endless.

  3. Expand: Can you align your brand with a social cause that not only creates value for your customers, but also for your organization internal?  Don’t forget, your team is your biggest advocate. Supporting them supports your business and consumer. Not in the consumer goods space, take a look at issues your customers and/or employees face for inspiration.

Finally, I am not saying there isn’t a space for Points and Cashback - I have actually worked on a few projects for clients in the last six months suggesting these traditional models as the best growth strategies.  The difference is that these organisations are generally an umbrella of organisations covering a wide range of consumer goods and services verticals. Alternatively, smaller local businesses like cafes are definitely seeing success with traditional models as a “delight” program.  To go even further, I might argue that Points and Cashback programs have matured to such a level that they are they are no longer an addition to a business but a traditional business in their own right. I will leave this for another day though.

Shout out to the brilliant entrepreneur Seth Richardson I had the pleasure of working with.  He started and sold a successful business around attribution, delivering a speech I will never forget in 2015 which inspired me in writing this article.

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