Three Ways Your Brand Can Earn a Higher Return on Loyalty

Return on Loyalty (ROL) considers the totality of a brand’s investment in loyalty along with the attributed economic impact returned to the brand.

For some marketers lately, the sheen of loyalty may appear to have dulled somewhat. This is especially true given the whiplash we’ve recently been experiencing in consumer and economic confidence, persistent inflation and the continued tightening of marketing budgets, with 2023 U.S. ad spend projected to decline from last year. Add to this the latest (and changing) darling trends in marketing—from the creator economy and social commerce, to generative A.I. and de-influencers—many brands have lowered the loyalty flame on the proverbial back burner. But loyalty hasn’t lost its relevance—or value. In fact, investing in loyalty is fundamental for the success of brands in the ever-suspended, post-cookie world we will soon find ourselves in.

That’s because loyalty programs—and their members—account for nearly half of companies’ annual sales, according to one report. And the fact that the data loyalty provides is a gold mine for organizations. But true loyalty is earned, not bought, based on the premise of mutuality, with the brand and customer both seeking to meet and exceed each other’s expectations. And loyalty is best achieved via the emotional and rational, not simply the transactional. In the last decade, it has become common and borderline cliché for sophisticated brands and marketers to view loyalty as more than a program, and to recognize the greater value it brings as part of the larger marketing ecosystem.

This elevated view of loyalty recognizes the boost in results that emanates from an enhanced customer experience and deeper, more substantial brand interactions.

Yet many marketers today who rely extensively on programs too often struggle to activate their loyalty strategy to realize more than the typically underwhelming, near-term transactional value they offer. The opportunity for brands lies in discovering the real promise of loyalty: a powerfully leveraged tool to drive sustained growth and earn a greater return on loyalty.

Return on Loyalty (ROL) considers the totality of a brand’s investment in loyalty along with the attributed economic impact returned to the brand. Savvy brands view the costs of cultivating loyalty as an investment in their customers, and with that investment comes an equally important belief in the reciprocity and value the customer brings back to the brand.

The financial rationalization of this investment hinges on the essential belief that a customer’s loyalty is optimally cultivated throughout the entirety of the customer’s experience with the brand. And when optimized, a brand is strategically positioned to earn a high return on loyalty through stronger retention, heightened advocacy, increased referrals, improved market share, larger share of wallet, and increased frequency, as well as through the creation of sustained ancillary and partner revenue streams. 

As you embark on evolving your loyalty strategy, below are three things your brand should prioritize to capture a higher return on loyalty:

COLLECT THE RIGHT CUSTOMER DATA AND ACTION IT WITH ZEAL

Promote a data culture that celebrates the importance of collecting first- and zero-party data during every customer interaction—from digital and physical, to outbound communications and inbound customer service interactions. Fully assess and audit customer interactions and experiences where they matter most and ensure that meaningful data is collected at key moments throughout the experience. This data is the critical element required to fuel the phygital economy, bolstering not only a brand’s understanding of the customer but also the ability to connect with him or her. By harnessing customer data, you’re creating an ongoing resource of powerful insights in the short term and building an invaluable asset to drive richer loyalty experiences and growth in the long term. For example, fast-casual brand Sweetgreen last summer launched a four-week long activation, “Rewards and Challenges,” as part of its app experience to acquire new customers, deepen engagement and increase personalization as it continued to refresh its loyalty program.

CREATE AND DELIVER EXPERIENCES THAT BRING REAL VALUE AND UTILITY TO THE CUSTOMER

Promotions and transactional content can infuse quick bursts of energy, engagement and short- term loyalty, but tailored, personalized content builds a deeper emotional connection and earns longer-term loyalty. This commitment to creating exceptional customer experiences can be a powerful mechanism by which to educate and build confidence with your customers and earn the trust and loyalty that brands covet. Amplify the value of content to uncover insights and to find out what matters most, and then utilize these insights to further enhance the loyalty experience. The online pet retailer Chewy is renowned for its unmatched customer support and service, and goes a step further by creating highly personalized post-support experiences that make the customer (and their pets) feel truly special.  

EXTEND THE LOYALTY EXPERIENCE TO YOUR PARTNER ECOSYSTEM

Evaluate and fold in strategic and channel partnerships to bring more value to customers while simultaneously developing ancillary revenue opportunities that increase your ROL. Get creative on what role these various partners play in your customer experience and create unique value propositions with your partner to enhance the customer experience. This should not be a one-size-fits-all approach; don’t be afraid to dial-up or dial-down specific partnerships across channels, segments, and experiences as they evolve. Amazon did this by leveraging its broader ecosystem for customer returns at Whole Foods, UPS, and even Kohl’s, where customers can return items without a box or shipping label and earn Kohl’s Cash to boot.

Embracing return on loyalty is an important strategic pivot for modern loyalty marketers to make. In doing so, the costs of loyalty are viewed as a worthy investment in customers, and all corresponding strategies and tactics naturally flow towards maximizing the financial returns of your brand’s earned loyalty.