Commentary

Bridging The Brand Loyalty Gap

The following was previously published in an earlier edition of Marketing Daily.

A 2018 Maritz study revealed that nearly 70% of consumers identified themselves as “transient” loyalists to brands. This means they can be convinced to buy a competitor’s brand. Only 29% of consumers considered themselves to be “resolute” loyalists who only buy their favorite brands.

Brand Loyalty: Dead or Alive?

These are telling numbers for brands who might have thought brand loyalty was stronger than that. It begs the question: Is brand loyalty dead? Or, if it’s not dead, can it be purchased by the brand that offers the most?

To get more insights, I spoke to several leaders in the space, including Barry Kirk, vice president of Maritz Loyalty, and Eliot Hamlisch, senior vice president, worldwide loyalty & partnerships for Wyndham Hotels & Resorts.

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I also chatted with Jigar Shah, CEO of Miles, a rewards app and platform that's quickly building momentum. Miles allows anyone with a smartphone to earn miles for all their daily travels — redeemable for exclusive rewards with leading brands across categories.

Building a Multi-Loyalty Strategy

Simply having a rewards program and getting members enrolled doesn’t translate to engagement for brands, with 53% of consumers having ditched at least one loyalty program within the last year (all stats in this post come from the Maritz study previously cited).

Kirk believes too many companies are still relying on legacy or “points-based” loyalty program that "simply chase the lowest price vs. having a differentiated strategy.

“You need a multi-loyalty strategy focused on creating the best experiences and connecting with customers in a social and values-based manner,” notes Kirk.

Personalization is also important. “Brands need to think about personalization holistically over the course of the entire customer journey, finding new ways to deepen and strengthen that connection,” says Hamlisch.

Bridging The Gap

Consumers today have a higher fatigue factor for individual loyalty programs or apps. More than half of millennials also actively block ads on mobile.

So brands are having to rethink their loyalty programs and explore new types of partnerships. Miles, which offers rewards from more than 75 major brands, retailers and transportation providers, is a good example.

“To date, loyalty programs and travel rewards have been siloed and often limited to one form of travel – with consumers facing exclusions when it comes to earning and redeeming rewards,” says Miles’ Shah.

With Miles, the more sustainable the mode of transportation you choose, the bigger the reward. Miles is also partnering with several cities (as well as retail brands and merchants) to boost customer loyalty, while promoting greener travel.

Strengthening Loyalty

Hotels, airlines and financial institutions are also improving their loyalty programs and partnerships to create stronger connections with customers.

“Driving differentiation through experience also shows a brand knows what their customer values,” says Hamlisch. “For example, a free hotel night continues to be the number one reward that travelers covet most. Yet, the reality for many travelers is that getting to that free night may feel impossible. With Wyndham rewards, we’re increasing the ways our members can earn points towards their free night.” 

Partnerships with the like of DoorDash and Marathon Gas allow Wyndham rewards program members to rack up their points faster than just getting them for hotel stays.

Tailoring Loyalty Programs to Younger Consumers

Millennials are 40% more likely than boomers to spend their loyalty points as soon as possible versus saving them,” according to the Maritz study. “Second, when millennials do redeem the points, they are doing so for lower-valued rewards, especially low-denomination gift cards.”

Another trend is that younger customers want to redeem their points for experiences versus things. For example, they show a preference for concert tickets or spa appointments versus merchandise rewards or cash.

Kirk explains, “This is clearly a reflection of the overall experience economic trend where consumers are now spending four times as much on experience-related services versus hard goods. When a unique experience is redeemed through a loyalty program and then shared on Facebook or Instagram, it can provide that consumer with a sense of status and earn attention. You really can’t accomplish this by redeeming a gift card.”

Still Alive, But In Need of Reinvention

Although brand loyalty programs appears to still have a pulse, it takes commitment and differentiation to defy the odds and build long-term brand affinity. 

Ultimately companies need a variety of talents and skill sets to run a successful customer loyalty program – from product and digital marketing teams to analytics and customer service. They also need to be open to new ideas and partnerships that help to deliver differentiation and value, versus a race to the bottom to offer discounts.

2 comments about "Bridging The Brand Loyalty Gap".
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  1. Ted Rubin from The Rubin Organization / Return on Relationship, June 1, 2019 at 10:25 a.m.

    Loyalty is not dead at all, it is simply evolving along with the retail landscape. Loyalty is now about much more than product or a "loyalty program," it is about customer experience with the brand/retailer, customer expereince with your marketing (somnething every brand seems to overlook... no one is measuring the downside of their marketing), and most importantly and siomething that plays in with all of this... SIMPLICITY.

    SIMPLICITY is the new EDLP! Make it easy for them... and they will buy it from you again and again and again. Frictionless fulfillment is the Retail of the future.

    #RetailRelevancy #RonR... #NoLetUp!

  2. Ron Kurtz from American Affluence Research Center, June 4, 2019 at 12:34 p.m.

    It is a mistake to think, as this article somewhat implies, that loyalty reward programs are anything more than a competitive differentiator when all other important factors determining product and brand choices are relatively equal. They are not strong enough to overcome competitive weakness in product design, quality, price, and value.

    It is also a mistake to think most consumers are not smart enough to see that many point based programs give a very small value to each point, thus often making the use of points less attractive than a cash purchase. This is  especially true for merchandise with broad distribution.  

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