Customer Experience

How to inspire customer loyalty

Adam Turner
Technology Journalist

Adam Turner is a Sydney Morning Herald senior technology columnist who has been writing about the challenges facing Australian business for more than a decade

Adam Turner
Technology Journalist

Adam Turner is a Sydney Morning Herald senior technology columnist who has been writing about the challenges facing Australian business for more than a decade

A customer loyalty program is much more than a card-based reward system - it's a way to create brand fanatics.

The report For Love or Money? 2013 Consumer Study into Australian Loyalty Programs by digital agency Citrus and strategic marketing company Directivity shows that loyalty programs are everywhere, with 88% of Australians over the age of 16 belonging to at least one.

However, a study by Edgell Knowledge Network found that despite being members of loyalty programs, customers don’t show any more brand loyalty than non-members.  In fact, 81% of Australian loyalty program members don’t know what the benefits are, or how and when they will receive them.

The problem with customer loyalty programs exists because the very concept of customer service is fundamentally flawed. Try the words on for yourself, they elicit zero emotional connection. And emotional connection lies at the heart of loyalty.

The idea of customer service is reactive rather than proactive. If you have a problem, we will fix it. If you don't seem to have a problem, we'll assume everything is fine, even though you might be passively aggressively criticising our brand in every social medium around.

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Why Apple has fanatic fans instead of "merely" loyal customers

Brands need to start mapping the entire client journey across various touch points and explore exactly what mental, geographical, and lateral moves a client might make, and where they need to plug the gaps.

Apple did this brilliantly when they modelled their client engagement journey on the Ritz-Carlton Hotel in New York. The reason we now have a concierge, a Genius Bar, and Geniuses at Apple Retail Stores is because Apple looked across their industry into hospitality for a great client engagement journey, were inspired by this model and applied it in a way, which has engendered the highest sales per square metre of any retailer in the world. This is the reason Apple doesn't have loyal customers, it's got fanatic fans.

Why are so many customer loyalty programs ineffective?

Most customer loyalty programs are ineffective because they are not “gamified” - as in they don't offer you a sense of progress, like you are offered in a video game.

The fundamental flaw of loyalty programs is that there is too many of them, and they are too hard to keep track of. You need to provide a sense of progress and gamification, so that your clients see that there is a good reason for them to stay loyal.

You need to constantly sell the client on why they should keep doing business with you, and you can do this via a nice interface: a simple barometer, messages acknowledging their custom and business, while making it easy for them to exchange their points for something of real value. 

How brands reach customers

Woolworths does this reasonably well with its Everyday Rewards points program, which I only collect when I spend more than $30 with Woolies. With this program, we have multiple touch points as it's the source of Fast Moving Consumer Goods so it makes sense for them to have a loyalty scheme.

Brands need to be more active across digital channels, and provide contextually relevant reminders to their loyal clients that they exist.

For example: Send a digital voucher to me each Friday at 7.26am because you have figured out that I will walk past your coffee shop at 7.35am and I crave a double espresso at that time, and will have just received 3G access to my iPhone upon exiting from the train station. Wow me with a push notification telling me to collect a 'hot double shot of espresso' with a 'thank the coffee gods it's Friday voucher’. Don't give me another coffee card indicating my 10th espresso is free. Provide me with meaning in my own context, please. 

How can businesses improve their customer loyalty programs?

I would seek to create umbrella brands (think One World frequent flyers program), which gives customers the choice of where and how they cash in their loyalty points.

Retailers in a suburban precinct or shopping centre, say Paddington in Sydney could get together and create a loyalty Paddington Platinum card which gives members of the Paddington Platinum a 5% discount in all the local stores on Oxford Street, and a 10% discount in the local restaurants to drive more traffic to the area, and discounts and perks for spending their dollars locally. This requires collaboration, but is technologically more feasible now than ever before.

Small businesses may also want to think about what else you can package in to ensure you add value to your VIP clients - special offers night, wine tastings, gift give-aways, and ultimately a recognition of their loyalty.

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