How Businesses are Transforming through Loyalty Strategy

Jun 15, 2020

A simple search on “Business Transformation” can lead a reader to believe that just about anything can transform your business. The headlines will read: “Transform your business through AI… through blockchain… through loyalty.” Some will go a step further with a more official, yet broadly titled term like “Digital Transformation.” In the end, these are just categorizations of stuff you could do …to accomplish something.

Transformation happens all the time. However, if you want to control or predict the outcomes, you are going to need a transformation strategy.

When you have an outcome in mind, it is much easier to consider how digital marketing will help you get there, or the role technologies like AI or blockchain can play.

Strategy vs Plan

It may sound obvious… but companies frequently get these two things confused.

The transformation strategy is where you plan to take the business to establish or maintain a competitive position.

The transformation plan is the series of timed actions you will take or control to accomplish the strategy.

Here are three impactful strategies that businesses have used to reposition themselves in the market, using loyalty as the driver of transformation:


Strategy: Re-establish your brand through the loyalty program experience

On April 9, 2017, David Dao Duy Anh was forcibly removed from United Express Flight 3411 operated by Republic Airlines. Footage of the incident was widely shared by news outlets and social media. As the story unfolded, people learned that he was one of four involuntarily selected passengers asked to leave to make room for employees. To make it worse, the next day the airline appeared to downplay the incident and described the passenger as the problem.

No matter how you look at it, it was a public relations nightmare to say the least. Trust in the company eroded overnight, sales and stock price declined, and the entire industry had to re-examine the rights of customers and acceptable operational adjustments.

United took a number of actions. However, the most notable were the ones felt by their customers in their loyalty program:

  • They brought in Luc Bondar, a change agent and expert in coalitions, experience, and loyalty to transform the experience of the frequent traveler.
  • They focused on making the experience easier, offering discounts on CLEAR for all members and free for the highest tiers.
  • They added an excursion perk to allow travelers to add a leg to their trip with no added miles.
  • The added several priority benefits for corporate travelers.
  • They added bundled perks to economy plus travelers.

These and other actions were the quickest way to re-establish credibility and value with customers. While United is now only 6th on the 2019 J.D. Power’s North America Airline Satisfaction list, it should be noted that all airlines rose last year to a record high satisfaction rating. And yes, they all discontinued the practice of involuntary bumping for employees.


Strategy: Use the digital transformation of your program to fast track upgrading your marketing

In 2018 at Money 20/20 in Las Vegas, Best Buy’s CMO made the comment that, “Our loyalty members are our most trusted critics.” It was a resonating statement to all retailers: you have a vehicle to listen to, and engage with your best customers on a shared objective. That shared objective: Make shopping here awesome.

Best Buy and other companies have spent millions upgrading their mobile and online experience. Seeking to remove friction between browsing and shopping, online and offline, and credit and loyalty. The app experience is one of the best at bringing these worlds together to drive a single experience. In one of the few examples in the market, Best Buy’s investment in supply chain, digital experience, credit, and supporting services for loyalty members are all ahead of marketing initiatives; providing a clear roadmap and path for marketers to explore messaging and offers in innovative ways.


Strategy: Expand the experience of the program to encompass the lifestyle that the core business enables

When you think of your phone service, you might think of your bill, or you might think of the time your call dropped because you were in an elevator. It’s rare that people think, “this service allows me to stay in touch with my son at college,” or “my friends and I can share all of our pictures with each other.”

We don’t think this way because it’s an industry that has traditionally been commoditized. Verizon in the US and Telefonica in the UK have each sought to change that dynamic by embracing the entertainment they enable, the fun that happens when they connect people, and changed much of their marketing to the lifestyle that comes with being a connected consumer.

AMC has pushed the experience of members far beyond seeing a movie. They have transformed the experience of going to the theatre and allowed customers prioritized access and freedom to enjoy that experience through a variety of programs that suit individual preferences.

Companies with a loyalty program with the single purpose of retention will do exactly that: retain more customers. It still works. However, companies that extend the experience through its loyalty program will have a fundamental impact on the growth of the core business and retain customers while doing it.

Give your transformation a strategy

One final note on developing a strategy: We hope these analogues have inspired some thinking about how you might set out a strategy for transformation. As you consider these and many other strategies, make sure to reach out to those in other industries that have gone through what you are about to undertake. Listen to what they were able to plan for and areas that they should have had a plan for. As with all strategic planning, be flexible on your path to get there, but consistent with your destination.


Ready to start strategizing? Check out our solutions page for all the details on how Kobie can help.