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Points aren’t the point

Feb 20, 2020
5 MIN. READ
If your brand doesn’t earn active participation through experiences that make customers feel appreciated and understood in a human way, they’ll find a new brand that does.

When we ask customers about the brands they are most loyal to, there’s often an interesting disconnect between the rewards brands offer and the reasons customers love them. Sure, we frequently hear about points (or another earning mechanism) and how they can be used to deliver value. But more often than not, we find that features of the brand’s experience are what truly drive loyalty.

While this may seem counterintuitive, there are myriad programs that demonstrate the experience-over-points phenomenon in action. Starbucks is a prime example—its program is a masterclass in two key experiential needs: (1) it makes the experience personal, and (2) delivers simplicity and convenience. If customers are already running late, they’re not going to want to stand in line for their morning pick-me-up, interact with multiple people, and slow down their schedules. That’s why the Starbucks Rewards app allows members to preorder and pay for their drink with a few taps of a finger. Now all they need to do is run in, grab their latte, and run out.

Make no mistake, Starbucks also relies on traditional loyalty tactics like points (stars), promotions and rewards to drive incrementality, new product and channel activation, etc. The core of its customer loyalty, however, is deeply rooted in the experience. The company uses data to personalize both the offers and the experience. The app is not only user-friendly, it creates a sense of reliability and connection between the customer and Starbucks.

Travel is another industry where a standout loyalty program needs to go beyond just earning points or miles. Delta’s SkyMiles provides members with an experience that sets Delta apart from other airlines. The benefits that come with tier status are what members love, whether it be free checked bags or upgrades to higher class seats.

The SkyMiles program and mobile app help make what can be a stressful experience easy by simply offering the customer hospitality and understanding. Delta’s mobile app sends smartly timed push notifications with flight delay information and luggage tracking status, giving members peace of mind in a space that can be full of headaches and frustration. The simple courtesy of these offerings to customers is an easy gesture that goes a long way toward making them feel cared for and appreciated.

In retail, REI is a great example of a brand with a straightforward loyalty program that doesn’t involve points. REI’s Co-Op involves a one-time $20 fee, but the membership more than pays for itself. REI rewards its members with a standard 10% discount in the form of an annual dividend to be used toward a subsequent purchase. The membership also offers free shipping on orders over $50.

The relationship between REI and its members goes beyond transactional. REI “gets” its customers and demonstrates this through its campaigns and content that aligns with its customers’ values and ideals. In doing so, REI has created a community in which customers feel a sense of belonging. The #OptOutside campaign to spend more time outdoors is a perfect example. It’s an emotional connection that rings true to its brand promise, draws customers to be loyal to REI, and helps sustain its active member base.

So, why does experience matter?

Bottom line: Customers have come to expect these types of experiences. And those who have positive experiences with your brand want to buy more of your products/services and actively participate in your loyalty program. This leads to an increase in your ROI.

The secret.

Brands like Starbucks, Delta, and REI are successfully executing a business-wide customer-first strategy. That’s no easy feat. It involves transforming every aspect and functional role of your company in order to consider how every decision—big and small—will impact the customer.

Here are five best practices to help brands become more customer-centric:

1. Be data-informed and customer-led. Don’t guess at the experiences that would make your customers actively participate in your program more often—ask them. But be ready to do something that improves their experience with the data they provide.

2. Focus on what your customers want and need. Then design your products, services, loyalty program, CRM strategy, operations—everything—around making it happen. The goal is to build a long-lasting relationship. This isn’t a one-and-done; it’s a continuous evolution.

3. Benchmark KPIs and adjust appropriately. Use key metrics such as Net Promoter Score, Customer Lifetime Value, and Churn Rate to determine if the changes you’re making as an organization are having an impact.

4. Be realistic about timing and expectations. Create a roadmap with key objectives, ideas, and milestones to help you hit your goals.

5. Start at the top (but don’t stop there). Successful customer-first companies have a culture that’s inherently designed to support a positive customer experience. And they’re typically quick to make it right when something goes wrong.

Experiences that foster trust, empathy, and appreciation inspire active participation and meaningful, long-term engagement with customers. This is where emotional connections and true loyalty are cultivated and maintained. Our Humanizing Loyalty report uncovers these connections and the other key drivers that create emotional loyalty, and how brands can establish it at scale with their customers.

Loyalty programs are built on a foundation of points (or stars or miles or dividends) that encourage desired behaviors and build brand engagement. But that’s no longer enough—brands achieve long-term success when they forge human connections and make emotional investments. These days, points aren't the point. Today's customer journey requires more than an exchange between the brand and the customer. It requires always-on relevance, utility, and personalization to drive active participation at each and every touchpoint.

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  • Engagement
  • Strategy