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The new age of loyalty in the digital world

Written by: Information Age

Published on: November 14, 2016

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Charlie Lyons writes for Infomation Age: The era of loyalty is over. In a digital world of a thousand apps and websites, consumers have no interest in, or need for, traditional brand loyalty.

For years, driving brand loyalty has been the job of PR, marketers and advertisers, but in the digital age – when most customer interactions happen online – loyalty must be the task of the digital designer.

Rather than focusing app and website design on making a quick sale, companies must prioritise delivering quality, enjoyable interactions that start to build a lasting customer relationship through well thought out loyalty systems. The sales will come later.

Traditionally, companies used points-based loyalty systems to keep their customers but these are no longer resonating.

In the US, research shows that customers who engage in loyalty programmes shop at 3.6 different supermarkets versus the average consumer who only shops at 2.9. Similar behaviours are evident in the UK, with a total of £5.7 billion unclaimed points existing across the top 10 loyalty programmes.

To compete, brands must focus on creating digital experiences that enhance the customer journey at every touchpoint to cultivate true loyalty.

In response to this changing consumer behaviour, brands are adopting one of four loyalty strategies which vary in effectiveness: cost-cutters, copycats, thoughtful rewards, and relationship-builders.

Cost-cutters

Focusing solely on monetary rewards, these are closest to the traditional points-based loyalty schemes and are often found in supermarkets or coffee shops.

However, these are no longer enough to entice customers in the long-term.

Copycats

These programmes tend to imitate others within the industry, offering largely the same perks as their competitors.

Copycats are usually found in the airline, hospitality and consumer goods industries.

Airline loyalty schemes from the likes of British Airways and Virgin offer similar experiences across the board – a tiered points-driven scheme with access to extra benefits like priority boarding or choice of seat.

But, despite often going beyond points and discounts in the benefits that they offer, they fail to traverse their industry norm.

Thoughtful rewards

These offer personalised offers and exclusive rewards to surprise customers and keep them coming back. ASOS and M&S are among the brands that use this approach, which can often help gain new customers, although may not be enough to keep them coming back.

Relationship-builders

This is where you are likely to find the real innovators in loyalty programmes.

These brands have identified areas in the customer journey where they can enhance the overall experience, driving loyalty and differentiating their loyalty programmes from their competitors.

A relationship-builder loyalty programme is leaps and bounds ahead of other loyalty strategies and should be companies’ focus.

By enhancing the whole experience through innovative benefits, they create an ongoing relationship between brand and consumer, prioritising valuable and repeated interactions over time.

This is where quality digital interactions come into play; brands need to build digital products that encourage a relationship, and develop loyalty through a mutual benefit.

While cost-cutters focus on giving rewards at the end of the journey after purchase consumption, relationship-builders rethink each step of the customer journey to bring value in different ways.

Relationship-builders cultivate brand awareness, offer personalised recommendations in the planning stage, improve the purchase process through saving time in queues or making payment easier through digital interactions and, after purchasing, they delight the customers with surprises or exceptional customer service.

They do also reward repeat purchases, but not as much emphasis is placed on this.

Brands need to focus on designing products that improve a customer’s experience.

We are living in an era where consumers are willing to pay more for experiences that offer true personalisation and target pain points in their everyday life.

If a brand can design a digital product that does some of the heavy lifting for the customer, enabling them to expend less time in the short-term, they will end up spending much more time with the brand in the long run as the quality of the experience will resonate.

Amazon is constantly innovating around time-saving, and their loyalty programme and augmenting products are set on this goal.

They use their loyalty programme, Prime, to engage with their customers at every touchpoint. Amazon subverts the typical loyalty scheme by having customers pay to join, but in return they offer a vastly enhanced service and currently have 63 million members.

By harnessing data to understand consumer behaviour and what their customers want, Amazon realised that time, convenience and access could be more valuable than money, and have innovated around this to create an experience that cultivates loyalty.

In conjunction with this loyalty scheme, Amazon has created several digital products that succeed in driving brand loyalty.

Take Amazon’s Alexa – the virtual assistant pairs with hardware, like the Echo and the Echo Dot, to maintain a far-reaching relationship with the customer.

With the hands-free, voice-controlled device, the customer can play music, control smart devices, set alarms, read the news and more.

This kind of product does the heavy lifting in a lot of the customer’s day-to-day tasks, taking initiative and often going above and beyond the customer’s expectations.

This builds loyalty through surprising and delighting the user, but it also makes the brand constantly relevant; it ensures the customer is thinking of Amazon when they’re not in their online store.

Similarly, Starbucks stand out from the traditional cost-cutter approach taken by other coffee shops by considering their customers’ context: they are on-the-go.

Their app allows customers to pre-order their drinks, which appeals to customers who like the ease of paying through the app and the exclusivity of skipping the queue. And it’s working; their app has 16 million active users, with 20% of Starbucks’ revenue being exchanged through the app.

You can achieve much through digital products that build and foster strong relationships.

However, a great, innovative loyalty programme will not succeed if the building blocks of your business are not in place.

For example, if you have a great product, but your customer service is non-existent, an ‘enhanced experience’ through a loyalty scheme will not work.

Once these building blocks are in place, however, a user experience-focused loyalty programme, executed through strong digital design, can resurrect loyalty in the digital age.

This article was originally published on Information Age.