It's impossible to overestimate the value of a good of loyalty program. I only fly Delta now unless I have to fly someone else. Yes, I like Delta since they've reinvented themselves with a better web site, way better service, etc. But the fact that I have lots of miles with them sells it. It even works with brands I don't have any passion for.
Take Panera. Nothing wrong with Panera Bread when the store layout works the right way. But the one near my office does not. The staff is great, true, but the store is a Rube Goldberg situation, that is weird, in an "Outer Limits" kind of way. But I go now and then. Why? Because I have points. What do I get if I earn a few more with my next coffee? A danish. Laugh away, but I’ll bet you would, too, if it happened to you.
I don't care if it's two weeks old and has the consistency of styrofoam packing. I want it. I earned it. So, yes, though my rational mind says “What are you doing? Stop, feet, stop! Get a life,” the animal brain wins every time. “Free danish, free danish, free danish,” it moans, as I shamble forward, arms outstretched, like a deceased character from "The Walking Dead."
I arrived at my loyalty jones late in life. I used to scoff at idiots who collected coupons and such. What a game; tom foolery for the idle. But, now? I love to win stuff. I feel like I’m playing bingo at a community center in Sarasota when I discover I’ve earned enough points on my Macy’s card for a 50% discount on a pair of shoes. Yes, it makes me feel like somebody. It validates my existence.
Delta Air Lines knows my name, and probably more about me than I do. So does Panera, for that matter. They seem to know when I’m hungry, which is no big feat since I’m always hungry. Which brings up another point: privacy. Studies have shown that people are very willing to trade privacy for value. Very willing. Maybe too willing. So Delta knows a few things about me. I don't care, I might get an upgrade on my next flight.
The winners in the loyalty wars are the ones who figure out how to add value in ways that connect the brand to the customer's passions. If you’re a furniture brand, adding value doesn’t mean offering a coupon for all-weather tires at at Pep Boys. Here's an example of a value-centered loyalty driver: Under Armour’s partnership with Sports Authority that uses UA’s MapMyFitness app.
People who buy UA gear, and definitely those who use the app, are probably into fitness and exercise. So the companies set up a loyalty partnership centering on MapMyFitness fitness challenges, where users can win gift cards and points within “The League,” Sports Authority’s loyalty program. All they have to do is the challenge: run so many miles this week. You get the points, so you get the deals, so you get motivated to do the exercise, which means you get a psychological lift from having done the exercise, assuming you do it, and you feel good about both brands, since they are getting you in shape for that free danish.
These programs also have to be explained as if the audience is made up of sixth graders. Actually, sixth graders are pretty smart. Maybe fourth graders. If not, the program loses torque out of the gate. Another example: I recall American Eagle Outfitters had a program (maybe still do) that made the process of signing up for the program easy, and explained it so it made sense even to someone like me. I felt downright welcome, not as if I were at the Belarus embassy trying to get a visa (I know about this, but won't go into it.)
I also have a loyalty punch card for the coffee shop near my house, and I visit that joint way more than I do Panera, even though the coffee costs more. Why? Because I love the service there, the space, the layout, and the baristas. Yes, the one-free-for-every-ten has that same pull at both places, but what puts the local place over the top is the service. Customer experience is the engine. A loyalty program is the ignition. So a loyalty program without great customer experience is like a key for a car that doesn't have an engine.