I'm cutting the cord—not because my cable company decided to jack up its prices without improving its product but because I want to explore the cutting-edge content available through nontraditional channels. Major disruptors like Netflix, YouTube, and BuzzFeed are redefining the information and entertainment industries, and they're not alone. Myriad industries are facing loyalty crises, too.

Twentieth-century brands relied on a strict, evolutionary business model. Product upgrades were released every six months, and consistency and credibility were the keys to sustainable growth.

But with technological changes coming too quickly for companies to maintain a performance edge (and savvy shoppers unwilling to pay over the odds), this traditional business model is dead. And it's taking loyalty with it.

The Disruption of Loyalty

As soon as people embrace one trend, something newer, bigger, faster, and sexier comes along to take its place.

The days of the perfect fit are over, and consumers have learned the pleasure of discovery. Some 60% will happily abandon favorite brands if they get a coupon for a competitor, and 30% will change brands just for the sake of a change.

Some businesses are responding to this demand for novelty. For example, the fashion brand Zara no longer updates its collection quarterly. Instead, it keeps up with the constantly evolving tastes of fashionistas by bringing new products into its stores twice a week. This approach must be working... The company is one of the fastest-growing fashion giants in the world, with annual profits of $3.17 billion.

So what, then, does loyalty mean in this "fear-of-missing-out" world?

Preference Over Exclusivity

Most consumers will try different products before they settle on their favorites, and companies dealing in subscription services like cable television and broadband should avoid locking people in. That temporary competitive advantage will backfire when better options appear.

Instead, companies should look to position themselves as the top consumer preference. And that means introducing a suitable, effective loyalty scheme.

Driving Consumer Preference

The oldest approach is the "earn and burn" strategy. Businesses provide basic, transactional, and convenient ways for customers to get deals on products and services that they already buy. This simple approach gives consumers a reason not to switch brands.

Though US households belong to an average of 21.9 loyalty programs, however, customers are active in less than half of them. In other words, most consumers aren't loyal to their loyalty programs.

This situation has led to a new approach—one based on an emotional connection between consumer and brand. These schemes focus on cultural relevance by offering shareable content, gamification, and useful advice. By providing unique, highly desirable experiences, these brands make their products and services relevant to consumer lifestyles.

These programs break through a cluttered marketplace and stretch the definitions of value and brand affinity.

The best programs provide some or all of the following to users:

  • Currency. Whether tangible or intangible, there is a clearly perceivable value exchange.
  • Community. Instead of stopping at the relationship between brand and consumer, emotionally connected programs offer consumers new connections to like-minded individuals, too.
  • Information. Top brands provide access to the latest and greatest trends, tricks, and tips to stay ahead of the game.
  • Entertainment. A fun, engaging, or distracting way to spend leisure time is essential.
  • Utility. Consumers expect an easy and intuitive way to learn and improve within a relevant area of interest.

Delight-Driven Loyalty

A perfect example of these principles comes in the growing arena of smart wearables. Fitbit might not be a traditional player, like Apple or Samsung, but the brand has built a loyal community through a strategy of continuous engagement.

By counting a user's every action toward concrete fitness objectives, Fitbit is redefining fitness as a way of life rather than a few hours spent at the gym. Its user experience is beautiful and intuitive, providing major psychological boosts through its real-time tracking.

The customer journey is personalized, communications are timely and contextually relevant, and badges and challenges introduce gamification to keep users engaged. For users who want to go deeper, the premium membership service provides benchmarks; detailed food, sleep, and activity reports; and a digital personal trainer.

So what should other brands do to follow suit?

There are six essentials for any good loyalty drive:

  1. Deliver and elevate the core value proposition. A loyalty program should never be random. It should emerge organically from the company's core product offerings and values.
  2. Find an indisputable point of difference. The best loyalty programs are memorable. If it's easy to confuse the loyalty program with another company's offer, it's easy to confuse the product, too. Look at competitors, and find a new niche.
  3. Keep it financially viable. Loss-leading initiatives can work in the short run, but they're not a long-term strategy. Ensure the program delivers value to both the customer and the company, too.
  4. Harness data. Generic loyalty programs struggle to engage with consumers. Gather data on program members, and use it smartly to deliver a personalized, individual experience.
  5. Keep the user experience simple. Nobody wants to navigate through endless, confusing pages to sign up or log into a loyalty program. Keep the program website intuitive and easy to navigate, and ensure the program is just as easy, too.
  6. Deliver relevant content at the right time. Users don't want to see Easter eggs in July or Christmas cards in January. Deliver content when it will have the most impact.

* * *

All businesses should seek to create an authentic emotional connection with their customers. Make your products and your brands worthy of loyalty, and that loyalty will arrive.

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What Customer Loyalty Means in a Fear-of-Missing-Out World

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image of Cecy Shveid

Cecy Shveid is senior vice-president of Planning at RAPP Dallas, made up of a diverse family of innovators, integrators, and implementers—specialists in high-precision Core Dialog.

LinkedIn: Cecy Shveid