Customer loyalty programs solidify a connection between brands and consumers. But to leverage their full power, businesses need to think outside the savings card.
There’s a misleading finality that comes with making a sale. Though, for merchants, individual purchases are the basic building blocks of success, every finalized transaction harbors uncertainty over whether a customer will return. A company that only sells to each consumer a single time will soon exhaust its pool of prospective clients. In that sense, the initial transaction between buyer and seller is but a prologue to the overall concern of marketing. Few businesses can sure their customers will continue to engage with them. There are always competitors offering similar products or services.
Some may be bigger, flashier or more convenient. We live in an age of disruption. How can marketers ensure return visits amid all this uncertainty?
For several decades, part of the strategy has been rewards programs: promotions designed to boost consumer frequency by admitting them into an exclusive discount club. A well-designed rewards program can help induce customer loyalty, impressing a top-of-mind mentality on consumers’ thinking. Conversely, rewards-program misfires can, at best, fail to make an impression on shopper behavior, and, at worst, harm the provider. Witness what happened earlier this year when Starbucks announced modifications to its longstanding rewards program. The changes triggered consumer outcry severe enough that Starbucks’ brand perception fell 50% in eight days following the rollout, according to market research firm YouGov, and even prompted a major European bank to downgrade its outlook on the coffee giant’s stock.
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Zach Brooke is a former AMA staff writer turned freelance journalist. His work has been featured in Chicago magazine, Milwaukee Magazine, A.V. Club and VICE, among others. Follow him on Twitter @Zach_Brooke.