November 17, 2014

Successful Loyalty Programs: How 4 Enterprise Loyalty Programs Achieved Success

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On this episode of the Customer Loyalty Space podcast, Ashley Tate, Director of Marketing at BigDoor, and Barry Kirk, VP of Loyalty Strategy at Maritz Motivation Solutions, share four examples of successful loyalty programs. They dissect each one in order to show what makes them so effective.

Starbucks’ Loyalty Reward Program 

  • Structure: Starbuck’s loyalty program has a great structure, offers a superb customer experience, and works to partner with other brands.
  • Personal marketing: Starbucks does a phenomenal job of personalizing the customer experience.
  • Mobile-enabled experience: Starbucks primarily wants their customers to download their app and experience the loyalty program through their phone. To encourage this, they’ve focused on optimizing the interface for mobile devices. 

Southwest Airlines’ Loyalty Reward Program

  • A touch of personality: Southwest Airlines has formed a close relationship with customers in way that brings the brand’s personality to light.
  • Clarity: When using the Rapid Rewards frequent flyer program, customers can easily understand their progress within the program and what’s required of them in order to earn additional rewards.
  • A social experience: The Companion Pass allows any active member who travels frequently to choose a companion who can fly for free with them, turning an individual experience into something communal. Such referral-based programs work to both increase loyalty as well as engage new members through trusted connections.

The Benefits of Social Proof in Customer Loyalty Marketing

Kirk noted that many loyalty programs are structured as an “Omega Man” experience where they treat users as if they’re the last person on earth, or the only person in the program, effectively “siloing” them off from other members. However, the reality is that there are likely millions of other active customers in that program.

Consequently, Kirk emphasized that a very good tactic for loyalty programs is to add mechanisms that let members know what other members are doing, whether they’re leveling up, earning rewards, or redeeming their points. This gives social proof to the program’s customers that they’ve made a smart choice in signing up for the program because they can see that the program is helping other people. Flash sale site Gilt, along with membership restaurant Blood and Sand both use this type of social proof to increase their customers’ loyalty.

Gilt’s Loyalty Reward Program 

  • Rewards more than just purchases: Gilt rewards both buying customers as well as those who might buy from them at some point in the future. 
  • User engagement: Even as an online-only retailer, Gilt competes with larger brands because of their focus on user engagement through content, social media, and a dedicated community.

Blood and Sand’s Loyalty Reward Program

  • Members-only restaurant: Members pay a fee to join, and are then able to enjoy the restaurant and purchase food.
  • Scarcity: Brand attachment is established very early on because exclusivity helps build social status.
  • A more personal experience: Because only a limited number of people can join, a customer is more than just a number to the brand. They personally know their customers and see and treat them as special and valuable.

Kirk emphasized that although Blood and Sand’s scarcity approach is not applicable to every business, the key point is to look at their strategies and see how one’s loyalty program might benefit from such an approach. If a business opts to build its brand on exclusivity, it has to be executed correctly, and the brand has to be in the right position to do that. Otherwise, the business risks alienating a large segment of their potential users. 

Ultimately, both Kirk and Tate agree that picking the best in class of these four successful loyalty programs is subjective as it would be based on personal likes and dislikes while taking into account each company’s specific and unique goals. Instead of declaring a loyalty marketing program winner, they suggest that a company interested in starting a loyalty program should look at the individual strategies these businesses have used to see what could be incorporated into their own program.

Kirk sees nothing wrong with copying best-in-class ideas, but cautions business owners to not be lazy and only look at their competitors. Instead, he encourages such owners to look outside of their industry for new ideas that could spur creative solutions for their own businesses.

To keep up to date on the latest in loyalty and engagement, subscribe to the Customer Loyalty Space on iTunes!

For more on setting up your own customer rewards program, visit Maritz Motivation Solutions or BigDoor.