Loyalty programs were once synonymous with points and rewards: do this, get that. But, the classic equation has been changing dramatically.
What we’re seeing now are companies emphasizing experiences, soft benefits and values more than points and rewards. To be clear, points and rewards are not going away – for many travel, hospitality and retail companies, they are table stakes to get people into the program. But, it’s the softer elements with emotional appeal that are capturing customers’ imaginations. Today’s consumers increasingly prefer experiences over things.
That’s especially true for younger generations whose shopping habits are in a more formative stage, and who may find traditional program structures rather old school.
And, there’s a bonus for companies – when done right, a program can have better financial performance if it offers less tangible, less discount-oriented benefits.
So, how is this evolution playing out in the real world? Here are a few examples of brands doing some non-traditional thinking and focusing their programs on appealing to the consumer’s emotional side.
ESTABLISHED LOYALTY PROGRAMS CHANGING FOCUS
Marriott has been playing in the loyalty space since the ’80s, with a long-standing program focused on earning points toward free hotel nights. Having merged with Starwood and re-launched its program as Bonvoy, Marriott is leveraging the glamour and excitement of travel, and leading with aspirational experiences such as insider access to sporting events, whiskey tastings, fashion shows, festivals and artist demonstrations.
Nordstrom’s Nordy Club
Another brand with a long-established program, Nordstrom’s recently revamped Nordy Club emphasizes member benefits with free alterations, free curbside pickup, access to sales and events, and access to beauty and style workshops. All are featured benefits of membership and are in line with the service orientation of the Nordstrom brand.
Verizon has had various reward programs over the years, but it has now moved toward a more dynamic and engaging set of benefits. Members get monthly credits that they can use not only toward device purchases and accessories, but also toward chances to get tickets to sporting events and concerts. To pump up the engagement, Verizon also provides its members with exclusive local offers that change frequently.
CONTEMPORARY BRANDS LEAD WITH BENEFITS
Sephora Beauty Insider
Sephora’s program often shows up on lists of top loyalty programs. Customers earn points for spending – but the program is really about discovering new products, offering choice and personalization, interacting with a community of like-minded members and celebrating each person’s beauty. With its tiers, early access, member community, exclusive savings and events, the program makes members feel appreciated and recognized.
Uber is a late entrant into the loyalty space, but it is jumping right in with a program that emphasizes tier benefits as much as – if not more than – points and discounts. Earnings and rewards are important in the new program, but benefits like priority pickup and cancellation fee waivers have strong appeal for frequent users. Uber does a good job of merchandising the fact that riders have received priority treatment because of their loyalty and the level earned.
AN ENTIRE CATEGORY MOVING TO SOFT BENEFITS
Retail Specialty Category
As noted above, rewards and discounts have long been table stakes in this vertical, but a review of major brands’ programs shows how softer benefits have been de rigueur as well: free shipping, early access to new styles, member-only offers, birthday gifts, etc. These benefits are a key part of the programs of Ann Taylor, H&M, Williams-Sonoma, Sephora and others. Even kid-focused programs are emphasizing experiences and achievements along with rewards. Tween fashion chain Justice uses its Club Justice program to sponsor events and parties, help celebrate special intergenerational moments and encourage girls to volunteer in their communities.
LEADING WITH VALUES
It has become very difficult for brands to differentiate themselves in today’s rough-and-tumble environment. With customers constantly bombarded by messages and ads, companies are looking for new ways to stand out. This is especially true for companies wanting to appeal to younger generations. Consumers today are inclined to be loyal to brands that share their values. Brands like The North Face, TOMS and New Seasons Market (a regional grocery chain with an emphasis on fresh, natural, local foods) do have loyalty programs with some element of earning, but the value propositions are very much intertwined with brand values such as the environment, community service and sustainability. The emphasis is on the community of customers and shared values rather than, “buy this, get that.”
LEARN FROM THE BEST, AND TAKE ACTION
So, are loyalty programs as we’ve known them going away? No, they are not! People still want to earn free (or discounted) merchandise, and they always will. But points and rewards are just the tip of the iceberg of what a well-crafted program can do.
Today’s most successful programs appeal to consumers on multiple levels. What we learn from the programs explored here is that each marketer should craft a program uniquely designed to deliver on the brand’s values and ethos, and to appeal to the emotional needs of its customers. Take a hard look at your efforts; using program data and insights into your customers, see how your program might be enhanced:
- Take an inventory of things you are already doing that could be re-positioned as special benefits.
- Personalize and differentiate based on what you know about individual customers.
- Think outside the box of traditional points and rewards structures.
There’s a whole wide world out there – make sure your program is optimized by including soft benefits, curated experiences and appeals to your customers’ emotions.
Read more about prioritizing non-traditional loyalty in our Kobie Review: Non-Traditional Loyalty Programs.