Loyalty marketing is at a crossroads
The practice of customer loyalty marketing needs to evolve even faster post-COVID-19.
Most loyalty programs, which are largely transactional, are insufficient to help brands emerge. Our research shows fewer than 25 percent of consumers are currently “very satisfied” with loyalty programs. That represents a 44 percent drop from pre-COVID ratings, which were already too low.
Consumer shopping habits, changed by the virus outbreak, could represent a huge opportunity or stumbling block for retailers. Sixty-five percent say how brands respond to the crisis will have a “huge” impact on their purchase intent and 37 percent have already made a change.
I think of loyalty marketing as paying attention to customers and acting accordingly. Puzzling, however, is that many brands still engage in actions clearly not in the interest of their customers. Many companies that haven’t “gotten it” up until now may be falling farther off course as consumer expectations continue to increase and interests change quickly in light of today’s financial and shopping realities.
Today, tangible value matters as 53 percent of consumers see savings as more important in light of COVID-19. But emotion will increasingly rule, meaning tangible value needs to be presented with non-transactional loyalty drivers including:
- Recognizing customers;
- Informing them;
- Saving them time;
- Providing access (to what?).
It’s also critical to understand that customers are loyal to brands, not marketing programs. Most loyalty marketers have focused solely on transactional value as a lead and not on the brand. If it doesn’t resonate emotionally with customers — and employees — it by definition isn’t loyalty.
In a COVID and post-virus world, the emotional relevance of a brand is and will be intrinsically tied to trust. American Express is a great example as its “powerful backing” brand positioning expresses its loyalty to its cardmembers. It also backs them should a disputed charge arise. Amex charges cardmembers more than its competitors and this is where emotional value trumps transactional value (i.e., competing on price).
The “person” in personalization means brands need to recognize customers as humans, not transactions. Today, more than ever, brands need to demonstrate to all their stakeholders that we are all, indeed, in this together.
The need for stakeholder buy-in is particularly true for vendor partnerships. Done collaboratively, these relationships amplify brand values, such as Walmart’s partnership with NextDoor on a new program — “Neighbors helping Neighbors” — that aims to make it easier for people in local communities to help one another as they deal with the coronavirus outbreak.
DISCUSSION QUESTIONS: Do you think consumers are primarily interested in loyalty programs that emphasize transactional values at the present moment? Will this remain the case as states reopen and the coronavirus pandemic eventually ends?