5 Takes on How Customer Loyalty Strategies and Tactics Are Evolving

4 minute read
business people discussing stratgies

In speaking with clients, prospects and other loyalty nerds, I’m hearing some new takes, new perceptions on loyalty—what it is, what it may not be, we want something like loyalty but not customer loyalty. Yet, as I dig in to understand—all of it is still loyalty. The foundational disciplines are still necessary to build or execute these new takes. Let’s explore a few evolving customer loyalty strategies and tactics!

Frequently heard loyalty statement #1: “We want to drive engagement, not something transactional like a customer loyalty program.”

I love this one. As I dig into these conversations, what people want is a way to drive engagement with customers between purchases. This is important for brands with long purchase cycles, but we’re also seeing highly transactional organizations tap this strategy, too.

The fundamentals here are simple. If you’re able to track customer behavior, you can recognize and/or reward those behaviors. Nowhere does it say that customer loyalty solutions can only recognize or reward for transactions.

At Annex Cloud, the majority of our clients are tracking customer behaviors at most or all brand touchpoints with advanced customer loyalty software, including when customers post pictures or hashtag the brand. We encourage this because we’ve seen that customers who interact with your brand, in addition to those that regularly transact, will spend over 250% more than customers who just transact.

Frequently heard loyalty statement #2: “No points. We do not want points.” “We’re going to recognize our customers behaviors by giving them badges or hats or something that relates to my brand.”

Ahhhh, yes. Points is a dirty word. Liability and discounts come to mind. How can you differentiate your brand?

This is a great idea, the idea of giving something that relates to your brand. If I’m in the NBA I could give basketballs. Creating badges that are unique to your brand or your brand experience elevates the experience for your customer. It makes the engagement more relevant. For example, Macy’s could give parade floats instead of points, further extending their brand from a shopping experience to a holiday tradition with family and friends.

Even though the experience is more memorable and more personalized than points, it’s still the same principle. At the end of the day, your basketballs or floats are all just currency. You’re offering these personalized badges in exchange for desired behaviors. If you wanted to get really creative you could offer multiple badges or multiple currencies. For example, Dunkin Donuts can offer donut badges for every purchase and coffee badges for every social interaction.

Go ahead, get creative! And you can do it with your loyalty technology!

Frequently heard loyalty statement #3: “NFTs are a must for my loyalty initiative.”

NFTs were all the rage in the first half of 2022, and are still running strong for many brands. Most brands are exploring NFTs and Web3 as a silo of their brand as they learn and grow.

The reality from a loyalty perspective is that, while you can go deep and get super creative, the best practice is to leverage the NFTs and the Web3 experiences you’re creating for the brand and overlay your loyalty experience. People can earn NFTs as part of their activity/interaction with your brand. The Web3 experience can include badges for participation. Those badges can have a value, reiterating the point I made earlier these are simply another currency.

Frequently heard loyalty statement #4: “Loyalty means discounts.”

Oh, what a bad reputation loyalty has! Loyalty only means discounts when the strategy is designed poorly. Recognition and rewards are fundamentals of an effective loyalty program or strategy. Nowhere is it stated that either the recognition or reward should be a discount.

In addition, something I preach a lot—loyalty should be more about recognition vs. the reward. If we as organizations did a better job of recognizing our customers for who they are, what they want, for their loyalty to us, they’d never leave and they’d be huge advocates.

Imagine, you’re a customer of two grocery stores in your neighborhood. One store showers you with discounts. One store takes the time to know who you are, who your family is, your dietary needs and other such details. They offer you recipes based on what they’ve learned and make it really easy for you to buy the ingredients needed to make these meals. Where would you shop more? At the place that knows you and makes you feel comfortable? Or the one who gives you discounts on items you don’t want or need? Recognition goes a long way!

Frequently heard loyalty statement #5: “Customer loyalty programs are not for the younger generations. Millennial and Gen Z are not interested in loyalty programs.”

As I dug into this one, I learned that it’s not the concept of membership nor joining a program that’s a turnoff to the younger generations—it’s the “loyalty means discounts” and “loyalty means points and my parents like points”. This is quite possibly why people are talking more about badges vs. points and engagement vs. transactions. The younger generations do want something different. They want to be recognized. They want a brand to engage with them, make it fun, make it interesting and, more importantly—make it relevant.

By observation and analysis, I can positively say that loyalty initiatives are evolving. They’re finally beginning to evolve to meet the needs, and the demands, of the younger generations.

There’s a strong demand to make loyalty strategies and programs more relevant, more interesting and more relatable. This demand is forcing companies to take the steps necessary to recognize their customers. Engage their customers in a meaningful way. There’s demand to utilize the loyalty concepts, strategies and technologies in a way that they were meant to be used. At last, we are getting to a place where loyalty strategies are going to be unique by brand and by customer segment. Eventually we’ll get to a place where brands implement (my personal favorite) individualized programs or ‘Me loyalty’—where it really is all about ‘me’.

Annex Cloud’s SaaS-based loyalty platform is highly configurable and includes a wide range of engagement options, so you can customize how to recognize and reward your customers in a way that aligns with your brand. Contact us to explore how we can help you add value beyond points to build lasting customer relationships.

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