Modern marketers are working to create engaging customer experiences that foster "cult loyalty"—the type of loyalty enjoyed by iconic brands like Apple or Starbucks—as opposed to just "mercenary loyalty" among consumers, particularly Millennials.
Barry Kirk, vice-president of loyalty for Maritz Motivation Solutions, specializes in consulting on loyalty programs for brands like Southwest, Marriott, and Purina. According to research by Maritz, more than 45% of consumers say the opportunity to earn rewards is a primary driver for purchasing from a brand. But as much as consumers value rewards, they want brands to forge a genuine relationship with them, not just offer rewards to get them to buy more.
Millennials, in particular, are often cast as marketing skeptics, but 76% of millennials actually go out of their way to make a purchase from a brand to which they feel loyal. Millennials are also 55% more likely than Baby Boomers to say that love of a brand drives loyalty, as opposed to simply liking a particular product.
All this data adds up to big opportunities for marketers to foster brand attachment and brand loyalty through structured programs designed to reinforce a true connection between consumers and the brand. Truly visionary businesses could even strive to create brand admiration, but loyalty starts with focusing on the customers' needs and challenges, and building loyalty programs that address them.
I invited Barry to Marketing Smarts to discuss strategies that brands can use to supercharge their loaylty programs and strengthen their relationship with consumers.
Here are just a few highlights from our conversation:
Brand ambassador programs and loyalty programs are different things (04:58): "An ambassador program or an advocacy program is really a subset of a loyalty strategy. So it may be part of your loyalty strategy that may or may not look like a program, but it's a component of 'how do I get the customers who love what I offer and have been benefitting from it to talk about it with others and see a benefit to themselves of doing that?' A lot of loyalty programs don't even include that element, surprisingly. They're more about just focusing on that individual and their specific activity, and not bringing in that social aspect of 'how do I connect to others?"
Design your loyalty program to entice your most valuable customers (05:39): "A loyalty strategy is an elitist marketing approach. If you don't like the word 'elitist,' maybe 'selective' is better, but I think 'elitist' works because you actually are creating a marketing strategy aimed at your best customers and your high-potential customers. For most businesses, that usually equates to something less than 30% of the overall customer base.
"So whereas with an advertising strategy or a direct marketing strategy, even social media, you might be aiming at your entire customer base, an effective loyalty strategy is really only interested in that sweet spot of about 20-25% of customers who are likely driving 80% of your revenue."
There's more than one type of loyalty (14:30): "One of the models that I've developed in my work is something I call the 'Multi-Loyalty Model,' which is the idea that there isn't just one type of loyalty that you can engender in a customer. There is, at the very least, four and probably more. So one of those types of loyalty that I often talk about is called 'cult loyalty,' and it has two dimensions.
"One dimension is that there is a values alignment between the consumer and the brand. So I look at the brand and say, 'You seem to be interested in the world and the world being a better place, and I can see that some of what you do is that you...have a charitable or altruistic element of your brand. Those are my values, too, so I'm going to bring my business to you, not because your the cheapest brand or because you bribe me, but because there's a values alignment.'
"And the second part of that 'cult loyalty' that brands really need to do a much better job at, is if you can connect me to other consumers who've made that same values choice for that brand, that's just social proof to reinforce that it was a good decision on my part. Let me somehow connect with those folks and see that we're all making that choice and it's a good choice. You could do that and still have a mercenary loyalty component where you're giving somebody a discount for being a customer. You can bring both of those to bear at the same time in a good loyalty strategy."
Barry and I talked about much more, so be sure to listen to the entire show, which you can do above, or download the mp3 and listen at your convenience. Of course, you can also subscribe to the Marketing Smarts podcast in iTunes or via RSS and never miss an episode!
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Music credit: Noam Weinstein.
Barry Kirk, vice president of marketing at Maritz Motivation Solutions, a company that designs employee recognition, channel loyalty, global rewards, and sales force incentive programs for companies all over the world. Follow Barry on Twitter: @barrykirk.