Customers today are spoilt for choice. Whatever you offer your customers, your competitor can offer a bigger bait to lure them. The threat to lose your most loyal customers is always on the horizon. You can create loyalty programs that are created to retain your best customers. But you’re your competition can design an equally good loyalty system. But why is customer loyalty more important today than ever before? A study described that 76% of Americans are more likely to stick to a brand if they have good loyalty programs. On the flip side, a whopping 67% said they don’t mind switching brands if they get a better deal on loyalty. Therefore, businesses ruthlessly fight to acquire and retain customers. But loyalty is not a zero-sum game. Is there a way to break away from the cat-and-mouse game of stealing each other’s customers?
Loyalty is not just about rewards and points, but a strategic goal to create a differentiation about your brand in the customer’s mind. Even if they want to make a switch if at all, the customers must have a huge emotional barrier to overcome before switching sides. Even if they eventually leave, they carry a sense of guilt that they have betrayed you. Yes, that kind of customer loyalty is possible. But can it be designed with a loyalty program? For that, you must tap into the aspirations of the customer.
According to a study, 74% of customers are loyal to the brand if they have something to aspire for. Aspirational loyalty is based on rewarding your customers for non-transactional activity. When customers feel motivated to work towards a goal of fulfilling their aspirations, they are devoted to your brand.
There is a simple rule to aspirational loyalty. Make your customers feel special by treating them like VIPs. Provide them with special access to an exclusive club that has entry barriers for commoners. People aspire to stand out from the crowd. Make it a goal for them where they have to work towards it. On achieving the goal, they can unlock the exclusive benefits of the brand which they can’t get anywhere else because it is only for them. When they reach close to achieve their goals, they accelerate their behavior due to get it quickly. This effect is called the goal gradient effect. Their every action results in more revenue for you, also while fulfilling the aspiration of the customer to be exclusive.
If we apply the Pareto principle, we realize that not all customers are the same. 20% of customers will generate 80% of your revenue. Identify your most profitable customers and satisfy their aspirations by rewarding exclusivity. This will turn them into your most loyal ones as well. Eventually, these loyal customers will eventually return you more profits in the long term.
According to a paper published in Harvard Business Review, the most loyal customers eventually become the most profitable customers. With each passing year in the loyalty cycle, those customers bring more revenue for the company through different avenues.
The aspirational loyalty program accelerates the value of the loyalty life cycle. Your 2-year-relationship customer can be equal to your 10-year-relationship customer. But this is only possible if the loyalty tactic is implemented as a part of a larger management strategy. Customers need to be constantly educated about the rewards and encouraged to achieve them. A sustainable strategic approach is needed to achieve sustainable loyalty, which can be measured in years.
Therefore, more companies are designing tier-based loyalty programs, where customers must pay to access the highest tier. This is usually the ‘VIP’ or ‘Premium’ tier, where customers can be a part of an exclusive club. They have access to products and services which are elusive to regular members of the program.
As it is 6 times easier to retain a customer than acquire one, companies continue to invest in aspirational loyalty for long term returns. This not only increases the loyalty lifecycle but also builds a brand legacy. One of the better ways to measure customer loyalty is the Net Promoter Score (NPS). The brands with a very high NPS score include Apple, Google, Netflix, Microsoft, Facebook, Amazon, Starbucks, Airbnb, Tesla, IBM, Disney, among others. It is no wonder that companies with high NPS are established brands that have some of the most loyal customer bases.
Apple is arguably the best example of what can be achieved through aspirational loyalty. Just like the ‘Diamonds are forever’ campaign which changed the landscape of the jewelry industry, Apple’s ‘Think different‘ invoked a sense of aspiration among large sections of the audience. It positioned itself as a company that challenged the status quo. All the ‘misfits, rebels, and round pegs in the square holes’ of the world began to identify themselves with Apple. Being different and exclusive was now something to aspire for, and that is where Apple struck the right chord.
It sells an aspiration rather than a product. According to a SellCell report, 91% of Apple users will stick to the brand every time. It is not just about innovative products or best-in-class service or unparalleled Apple ecosystem. Apple is the most valued brand because of its most loyal customers.
As Simon Sinek says, “People don’t buy what you do, but why you do it. And what you do simply proves what you believe.”
When customers start aspiring to become like the brand, their unwavering loyalty eventually follows. This loyalty cannot be tangibly measured in monetary value but builds a long-term relationship with the customer. This is the primary reason why Apple is one of the most profitable companies on the planet today. It is bearing the fruit today but the seeds were sown right back in 1976 when Apple was founded. Every start-up ‘aspires’ to be Apple, every rebel ‘aspires’ to be Steve Jobs, don’t we?
As mentioned in the blog, aspirational loyalty programs go a very long way to accelerate revenue and build a long-term brand value beyond monetary gains. But it is not easy to create a reward program centered on aspirational loyalty. Well, Annex Cloud is your loyalty partner to help you at every step.
With a well-defined process and crystal-clear loyalty strategy, Annex Cloud will build a reward program to help you achieve your end goal: boost revenue through aspirational loyalty.