• by Michael Hemsey , March 15, 2013

Summing up loyalty comes down to experiences: positive experiences engendering decades of loyalty and negative ones that take longer to subside. But let’s focus on the positive with two anecdotes. On Valentine’s Day, my wife’s friend received a handwritten note from a sales associate at Neiman Marcus, thanking her for a Tom Ford perfume purchase while suggesting two new fragrances from the same line, samples included.

“Dear XXX, I know that the Italian Cypress must still be exciting your senses,” the card began. “Based on what we discussed last time you were here I put together a couple of samples of what I thought you might like.”

In an age of impersonal emails and untargeted offers, personal messaging made my wife’s friend feel valued. It’s great to see handwritten notes and unexpected samples have not been forgotten. Clearly, the Neiman Marcus salesman recorded customer preferences into a CRM program and turned data into action.

Then there's my own experience with Uber, a two-year-old app. Uber pinpoints your location, or you enter a pickup address, and it allows you to select private taxis, limos or SUVs without the hassle of finding a cab or doing the “New York wave.” The app links your credit card to each payment and eliminates card swipes and clones, while accruing points on various loyalty programs. Chase Sapphire Preferred awards 2.14 points per dollar spent and car services count as travel expenses. Here, too, the experience concluded with a Thank You email.

"Hi Michael, we hope you enjoyed your first ride with Uber!” it read. “Below is your custom Uber invite link. Each friend that signs up with your link will receive $10 off their first Uber ride. And, for each of your friends that takes a ride, we'll drop $10 Uber credits on your account."

The science behind loyalty

These examples work because, as Forrester Research pointed out in a 2012 study, consumers reward brands that “make them feel special” and will pay more for that service. American Express, for instance, scored 37% higher than MasterCard on delivering special experiences and enjoyed 18% higher pricing power as a result. Part of that experience means: brands empowering frequent users to promote products via social media and traditional outlets, good corporate citizenship, and becoming an “invaluable resource” – or a brand that consumers feel they can’t do without.

None of these findings directly link to specific loyalty programs. It’s the little things -- the subtle corporate signals that inform customers that their experience, managed across all channels, is tops. 

For brands, meeting consumer experience expectations has a practical marketing purpose, and is only the beginning.

Delivering quality experiences:

• Are how brands distinguish themselves in competitive markets. For instance, global ad spending was up 4.3% in the third quarter of 2012, to $139 billion. Brands like Samsung, Microsoft and Apple shelled out $3 billion, $1.9 billion and $933 million, respectively, in advertising in 2011, as each wrestled for dominance. With this kind of rivalry common, experiences set brands apart. 
• Equals emotional connections that drive product loyalty -- a vital omnichannel component as marketers promote brands across multiple channels. The 17th Annual Brand Keys Customer Loyalty Engagement Index found that emotional engagement trumps promotions and discounting in consumer importance. So when Hyundai ties for the number one spot in the automotive subcategory of the loyalty index, something is right.
• Ensures the rise of brand ambassadors. Emotional connections inspire people to discuss their positive experiences. And despite brand-fickle and loyalty-suspect consumers, committed fans drive further brand buzz, resulting in higher profits and ROI.

Loyalty management goes a long way too

When discussing customer experience importance, back-end loyalty legwork is also key -- the convergence of management styles uniting traditional loyalty program metrics and customer relationship management (CRM) under one roof. For Neiman Marcus, imagine customer insights volume if in-store experiences (and the information used crafting the note) were augmented with loyalty program data. I suspect far more customer-specific notes could be written. Merging CRM and loyalty helps realize experience-driven outcomes, increases brand efficiency and corrects downstream errors.

Experience is everything. Yet what experiences inspire loyalty remains fluid. Keeping these observations in mind will not guarantee brand success, but it will improve loyalty odds. And combining traditional outreach with CRM might be the best loyalty solution yet.