By Ian Truscott, Tahzoo
CMOs think about digital marketing strategies and how to measure themselves often in terms of “paid,” “owned” and “earned,” especially when it comes to media attention. But marketers in retail should also consider what these terms mean with regard to loyalty.
Loyalty programs are getting a bad rap right now. In some B2C verticals, like airlines, they are proving to be a millstone on the balance sheet, driving some to make changes that are unpopular and that get the attention of national newspapers.
In retail we have a consumer that has a wallet full of cards and a deck stacked in their favor as they play their hand with a firm understanding of the hand of the “dealer” or retailer, which is the value of their data in the currency of points. It’s a cold transaction.
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This cold transaction is paid loyalty. A relationship built around the reward, what we describe as a calculative connection.
A calculative connection is fragile, the moment the numbers add up better for a competitor, a consumer with a calculative connection to a brand will quickly switch.
Therefore, the consumers’ loyalty and the rich vein of data that you get in return is only yours if you are prepared to pay the most for it.
Competing on that basis, having a loyalty program that the calculative consumer will consider slightly better than everyone else’s is a race for the bottom, a price war that creates an in-balance in the fair exchange (the notion that today’s marketing activities needs to benefit both the consumer and the brand).
To get out of this race for the bottom is to add earned loyalty to your program.
Earned loyalty is part of the perfect program mix, as consumers really want three things from loyalty programs:
- Reward: What is it that this consumer gets in return for their loyalty? The calculative connection.
- Recognition: Loyal consumers want to be recognized, a personalized online and offline retail customer experience with special offers, a connection to privileged information and the brand knowing their name and their preferences.
- Respect: An emotional connection, one that’s welcomed and not creepy, leading to a mutual feeling of respect.
Aside from providing a great customer experience in the first place, in terms of loyalty programs, meeting the consumer’s need for recognition and respect are the contributing factors to creating earned loyalty.
Earned loyalty not only creates the loyal customers you desire, but brand ambassadors (or sneezers as Seth Godin describes them), that actually do more than just “sneeze” and advocate your brand — they develop an affinity.
Affinity is powerful; consumers with an affinity for a brand (Apple being the much quoted example of this) do the following things for you:
- Try new things
- Defend you
- Recommend you (the sneezing)
- Overlook mistakes
- Give you feedback to help you get better
- Participate and contribute
- Support others
These are not things you are going to get through a one sided paid loyalty program or calculative connection; they are the behaviors you get with the emotional and personal connection of earned loyalty. So when developing or evolving your loyalty program, it’s time to think of earned loyalty, not just paid loyalty.
Ian Truscott has spent the last 15 years working with or developing web content management, personalization and marketing technologies serving as a developer, practitioner, marketer and as a member of the leadership team for various recognized vendors. This has included a stint working with Gilbane group as an industry analyst and heading up Product Marketing at SDL. As Senior Vice President, Client Principal for Tahzoo, Truscott brings this diversity of experience to each client engagement, helping Fortune 500 companies build strategies that deliver relevant and contextual customer experiences.
