Meeting Consumers Where They Are: Loyalty as a Long-Term Growth Strategy
Smart brands are seizing the opportunity to unbox loyalty from its traditional silos, letting aspects of it coexist with the larger brand experience to entice customers to join them for the long haul.
If the last three years have taught marketers anything, it’s that consumer behavior continues to shift and expectations have changed, forcing many brands to rethink their marketing efforts and overall customer experience. Loyalty marketing is no exception. As consumers report less brand loyalty and are more likely to seek brand experiences that align with their views and values, loyalty marketers are seeking ways to capitalize on less frequent, mid-segment customers as a long-term retention and growth strategy. Below are a few ways that’s playing out.
PAID LOYALTY IS ON THE RISE
Subscription memberships aren’t new, but as a form of loyalty, they’re becoming more common. Critical to the success of these paid loyalty programs, often under the guise of a “membership,” is perceived and actual value. For a customer to invest on a monthly or annual basis, the proverbial juice has got to be worth the squeeze. It also drives a heightened level of commitment, which often motivates such customers to reap the rewards. While Amazon Prime is the obvious example here, further afield, and in different industries, other brands are also putting this model to the test.
Nowhere is this more apparent than in the fast-casual and quick-service restaurant (QSR) space. For example, Panera’s Unlimited Sip Club offers unlimited coffees, teas and self-serve drinks, as well as free delivery, for $11.99 a month. And sweetgreen’s Sweetpass+ charges members $10 a month for perks like $3 off every 12 hours for orders over $9.95. For fast-casual chains, these subscriptions do more than create a steady stream of revenue: they incentivize the frequency of in-store visits to increase foot traffic and average order value while being able to marry online and offline behavior through their mobile apps. For some, these perks are worth it even if they’re not taken advantage of regularly.
FLEXIBILITY AND CONSOLIDATION
Travel loyalty programs have long been associated with complex, hard-to-understand rules, earnings and tiers linked to spend, distance and stays, and often feature a co-brand credit card component. These types of programs—typically an earn-and-burn experience offering the allure of elite status—were historically geared towards business travelers, often on the company dime and at the front of the line. But the last few years saw business travel under pressure, which resulted in an increasingly large number of infrequent travelers, often combining short business trips with leisure bolted on.
One brand capitalizing on this shift in travel behavior is Expedia Group, which recently launched its OneKey program, uniting the once-separate loyalty programs of its three businesses across Expedia, Hotels.com and Vbro with a seamless and flexible experience. This consolidation allows infrequent travelers to earn and redeem across flights, accommodation, car rentals and extended leisure in any combination, all in one place and on one platform. Well-crafted partnerships can also serve to enhance the travel journey. Take Delta, which (notwithstanding its latest program changes and the subsequent backlash) has expanded its partner ecosystem to brands like Lyft and Starbucks, allowing SkyMiles members not just to earn miles during their journeys but also to extend the brand experience to everyday activities, keeping them engaged and the brand top-of-mind.
CREATE A COMMUNITY
Finally, some brands are tapping into the idea of creating a sense of community to attract customers. It can be difficult to achieve, but when done right, curating a lifestyle experience has its benefits, such as a sustained sense of familiarity and affiliation and the making of long-term preferences through which members can attach themselves. In some cases, these programs are less about frequency, recency and monetary values and more about being accessible and always on.
Luxury hotel group Ennismore recently launched a paid loyalty program that is not your traditional take on hospitality. Called Dis-loyalty, it encourages members to explore its upscale locations and high-end properties around the world, rewarding them for being “disloyal,” as it were. The travel and food program doesn’t offer rewards or tiers but rather a series of always-on benefits and discounts, whose aim is to instill a mindset geared towards creating a community and becoming a luxury lifestyle brand. Or take REI, which sits on the other end of the spectrum but takes a similar approach. The outdoor retailer offers a one-time investment of $30 to join its Co-op membership for life and offers benefits like being able to trade in used gear, fund donations, hold member events, and even vote on board members. And it’s immensely popular, with 23 million members and counting.
As consumer behavior continues to change, so too are the ways brands are evolving their customer marketing and retention efforts, making the goal of brand loyalty a more comprehensive pursuit than ever. Smart brands are seizing the opportunity to unbox loyalty from its traditional silos, letting aspects of it coexist with the larger brand experience to entice customers to join them for the long haul.