Going from Connected to Engaged: The Evolution of Loyalty

Dec 7, 2017

When building a loyalty program, it’s essential we have a clear understanding of who the customer is, what gets them to come back and what they expect. According to Google Think’s “The Power of Gen C: Connecting with Your Best Customers” the “Connected Customer” or “Generation Connected” is a new cohort lens to look through while keeping up with these evolving expectations. While most generational segments are clearly defined by an age bracket, Gen C is not. They are based on psychographics around creation, curation, connection and community. This consumer mindset spans across generations focused on inspiring technology and looking for purpose through a community.

Customer expectations are changing and the same is true for loyalty programs. We’re seeing programs go beyond transaction-based rewards to focus on engagement-based rewards. As a result, a rising interest in earning points for non-transactional behaviors such as liking a social media post, publishing a review or sharing a personal story are all vehicles to build emotional loyalty. These positive feelings associated with interactions from the brand support both an increase in the customer’s lifetime value and the likelihood that they’d come back and spend more. By incentivizing engagement, the brand not only shows that they are listening, but also creates opportunities for members to feel special and recognized.

Three trends for the future of loyalty:

Building an emotional connection: Tying loyalty programs with a sense of belonging builds trust between members and the company’s products/services. User-generated content encourages this exact behavior. Verizon Small Biz Rewards started a movement in the industry and launched their Ugly Sweater Sweepstakes, which allowed small business owners to upload a photo of themselves in an ugly sweater with a holiday theme, giving members a chance to earn points and entries into the sweepstakes. The grand prize winner won a $15,000 Reloadable Verizon Small Biz Rewards Prepaid MasterCard and five other winners won $1,000. This was timely, relevant and made members feel as if they were “breaking out of the holiday monotony.” The emotional appeal around this circumstance showed how the brand was authentic and started a genuine dialogue between the members and the brand.

Engaging through a community: While many brands say they have a community, we see a big opportunity in fostering both brand-to-consumer and cross-consumer communication to build an engaged community. If done correctly, this type of community can have impact to both acquisition and retention. Sephora encourages their Beauty Insider members to upload their “looks,” making members feel that the community is exclusive and only for them. While anyone can see the posts and give a “heart” to the ones they like, only members have special access to create content. Sephora recognizes their members by giving them an icon showing which tier they’re in (such as “Rouge,” “Insider,” or “VIB”) and how long they’ve been a member using words like “Rookie” or “Go-Getter.” There’s also a dedicated section on their website for conversations between members. It operates similarly to a web forum allowing them to contribute by asking and answering questions.

Going from creation to co-creation: Connected customers create content for expression and form bonds with others. Google Think reports that 90% of connected customers create online content at least once a month because they feel it’s meaningful and necessary. Whether posting an image, video or publishing a review, they want to be vocal supporters of brands they love. “My Starbucks Ideas” reinforces community and engagement by letting members come up with ideas that they feel would be most relevant to them through solving problems, products/services and reacting to others. As a result, the bond between the company and their most loyal customers is strengthened. A co-creation community has helped Starbucks add Wi-Fi, private lounges and bring endless cups to their storefronts. By giving members the opportunity to not only engage with their favorite brands, but also actively work to make them better, members feel as if their voice matters – which leads to greater loyalty.

Bottom Line: Engagement-based earning is the new loyalty marketing.

The change in customer expectations had a direct effect on how loyalty programs offer rewards. Now they are using more engagement-based rewards to make their most loyal customers feel good and come back. Fostering community through user-generated content makes an impact on customer loyalty and co-creation will continue to play a role in 2018.