If your customers are loyal to the points, the moment you stop these points your product will stop selling, says Niraj Dawar in Tilt: Shifting Your Strategy from Products to Customers. In a fickle market in which customers tend to follow discounts and deals, does brand loyalty really exist? We weigh up the case for brand loyalty versus point loyalty.
How to win Brand Loyalty
Winning brand loyalty is less about points and more about experiences. In retail 57% of consumers have noticed a disparity in the promotions they see online compared to those they see in-store. Similarly there’s strong consumer appetite for mobile-enablement within the retail and restaurant customer experience, according to our latest CX whitepaper. Brand loyalty, then, is more appealing when online and offline touch points are married up.
There’s still a better way to attract customers. Companies that can make a product “easier to buy, easier to find, easier to learn how to use and then eventually dispose,” tend to retain its customer base for longer periods of time, says Dawar. At Eagle Eye we believe in the power of interaction, where the shopping experience is often more important than what the customer buys (or the points they earn).
Your reward program needs to be making your customers’ lives easier. The Greggs loyalty app, for instance, offers a pre-paid solution for customers to credit their account and receive highly targeted rewards based on their purchase history. Customers who feel like a brand really understands them are more likely to be loyal, while irrelevant promotions are the biggest threat to brand loyalty. Nearly a quarter (24%) of 18-24 year-olds quit loyalty schemes as a result of receiving excessive generic communications (Reload your Loyalty).
All Bar One: A Lesson in Customer Experience
Many brands have an archaic view of customer loyalty, with paper stamp cards, generic offers and minimal engagement as mainstays in the retail space. The All Bar One app goes beyond loyalty and offers experiences in the form of in-app cocktail recipes, personalised promotions and smart messaging fuelled by beacon technology. All Bar One has moved from a traditional loyalty program to a connected experience tailored to individual customers. The result? Increased digital appetite, footfall, sales and repeat custom.
“Consumers are ready to interact with stores to improve their customer experience,” says Tim Mason, Eagle Eye CEO. “This is a great opportunity for businesses to speak directly to their customer and gain valuable insight and data which will help improve customer experience and drive brand advocacy.”
While All Bar One’s loyalty app still utilises points, the connected customer experience it provides is arguably more instrumental in advocating customer loyalty.
The case for Points Loyalty equating to Brand Loyalty
Points-based rewards can encourage brand loyalty in two key ways. The first is the emotional-psychological benefits that stem from being upgraded to premier tiers (such as the Starbucks gold card, earned after banking 300+ ‘stars’). The benefits that come with a higher tier are worth more and the elevation in tier has the feel-good factor. This good feeling eventually becomes synonymous with the brand.
On the other hand, emotional reactions to points systems are volatile and can easily switch if a reward is no longer available, or if a tier is downgraded. Branded loyalty programs mitigate issues stemming from points-based rewards through fostering a sense of belongingness and increasing understanding of customer needs.
One way of understanding customer needs is through analysis of individual customer interactions with your business (namely a single customer view) and analysis of basket data. With Eagle Eye AIR you can create tailored rewards based on customer data to create an emotional resonance that equates to brand loyalty. Discover our loyalty product and get in touch for a personalised quote based on your business needs.
What’s your opinion on point loyalists versus brand loyalists? Let us know on Twitter @WeAreEagleEye.