The holy grail of marketing is loyalty. Every marketing plan includes a flow chart on how to migrate consumers from awareness to trial to repeat to loyalty. Saatchi CEO Kevin Roberts even defines a brand as “loyalty beyond reason”.
Yet many brands approach loyalty primarily through loyalty programs and loyalty cards that bear little relationship to true loyalty. It’s “loyalty for hire”, not “loyalty beyond reason”. When nearly every retailer has a loyalty program, loyalty cards lose their meaning.
My wife has so many loyalty cards, she can’t keep them all in her wallet. She stores them in a ziplock bag in her purse. Yet Trader Joe’s, the grocery store where she is most loyal, has no loyalty card at all. Last year, Satmetrix named Trader Joe’s the retailer with the highest customer loyalty scores in the US. Trader Joe’s generates that loyalty simply through the merits of being a remarkable retailer.
Loyalty doesn’t look like a card. Loyalty looks like this tribute video a Trader Joe’s fan created for fun. It’s already been seen 830,000 times by other Trader Joe’s fans.
What examples have you seen of brands that generate true loyalty with customers?
(Marketoonist Monday: I’m giving away a signed print of this week’s cartoon. Just share an insightful comment to this week’s post. I’ll pick one comment by 5:00 PST on Monday. Thanks!)
This loyalty topic reminded me of this Brand Loyalty cartoon I drew in 2005.
21 CommentsJoin the Discussion
Daniel Barcelo says
Wow that is a really great take on what true brand loyalty looks like. I thing every up and coming PR professional (that I soon hope to be) should strive to help their company and clients build brant loyalty “beyond reason”
Paul Copcutt says
Another group that ‘suffers’ from this over loyaltyiteiss are hotels. As far as I am aware you never see a loyalty program at Four Seasons or Ritz Carlton, just great service and a tracking system that knows where and when you stayed, room preferences, etc. The closest is if you hold a particular credit card or other.
Reward me with a great experience and I will keep coming back AND drive past 5 similar businesses to get to yours.
Just my toonies worth.
For me, retail chain Zara is exactly about this. They don’t do loyalty cards, or have a huge A&P budget to be spend on discounts, but acknowledge that real loyalty is about drawing consumers as often to your store as possible. About 75% of Zara’s merchandise on display is changed every three to four
weeks, which also corresponded to the average time between consumers’ shopvisits. An average
Zara shopper visited the chain 17 times a year, compared with an average figure of three to four
times a year for competing chains and their customers (http://www.carlospitta.com/courses/negocios%20internacionales%20y%20e-business/readings%20and%20papers/parte%209/zara%20(harvard%20case).pdf)
Quite interesting compared to the industry, as they often have a new collection every season, so only 4 times a year.
So my car was broken in to and two things were taken. A roll of quarters ($10), and all my loyalty cards. (passed over the GPS and the universal phone charger.) I wonder to what store this thief is so loyal? Pet store, liquor store, CVS, assorted grocery stores?
Hehe… – How very true! A real loyalty brand will fill your heart with joy instead of filling your wallet (or a whole bag) with plastic cards.
The only loyalty scheme I’ve come across that offers genuine value; besides the airlines (love emirates when you are a Brit in oz) is smith hotels. A happy little extra every time you check in, plus points depending on cost of stay that actually allow you to get cool and desirable stuff quickly. And with great hotels and a guaranteed best rate, it just becomes a no brainer for special occasions. I don’t work for them.
So many other schemes offer little tangible value. If consumers know they can get offers just by searching offer voucher sites; what’s the point of partner offers of 10% off on things like car hire? It’s just not enough nowadays. Value has to be unique or large enough to feel like the brand is doing them a favour. I worked on a brand which was famous for offering great value generally but it was still a struggle to push the case for exceptional or unique offers for its loyalty scheme. Sigh.
Tallie Fishburne says
For the record, my loyalty cards are NOT in a Ziploc bag (sorry SC Johnson, I’m more loyal to Target’s Up ad Up). Instead, the are in a lovely little British flag bag that makes me smile every day (from Accessorize … another store that earned my loyalty).
What the loyalty cards really are saying is that you the unloyal customer are not welcome and consequently you are presented a fine for shopping with them by witholding the discounts they would have offered you otherwise …
Two examples that immediately come to mind are Nordstrom and Southwest airlines. While they both do have loyalty programs that is not why I am loyal to them. And from the stories I read and hear all of the time, neither are most consumers. Nordstrom creates loyalty from the excellent customer service. Speakers often use Nordstrom as an example. I have a few amazing Nordstrom stories of my own. I know that I am probably paying more for an item than if I searched around and comparison shopped but I also know that if I do buy something somewhere else and have any kind of problem with it, I will have a much harder time returning it than I will at Nordstrom. Southwest is similar. I am loyal to them because they are efficient, nice and fun. They aren’t even necessarily the lowest cost option all of the time but they don’t have alot of the extra fees and they are always my first option.
Ritz-Carlton DOES have a loyalty program (ritzcarltonrewards.com).
It’s the administration of the loyalty program that’s the problem, not the concept. It should provide both small immediate and larger long-term rewards, be easy to understand and use, and not burden the consumer.
I find most loyalty programs to be worthless. The points I earn for groceries can be used for a gas discount… but only for the next 5 days. The petfood store and pharmacy store email me coupons… within 24 hours of having already shopped there, for those very items, and the coupons expire this week. The department store offers “cardholder-only” specials… but you have to have the coupon they mailed you to redeem them. It’s almost as if they really don’t want you to bother them by shopping there.
Tom, I think you are mixing up “Loyalty” with “Data Collection” – the real objective of these cards are to gather data on consumer purchases.
Also, your wife should use the “Key Ring” app for iphone -> you can keep all your loyalty card info there. It’s a great app.
Let’s be honest. Consumers seek value above all else. If you give good value to them (and as we all know this is not simply low price), they will come. Zara and Trader Joe’s are all examples of such. I would argue that no loyalty programs actually work as a loyalty program.
I don’t even think airline loyalty programs work. I think airline loyalty program works because of the value that particular airline provide for that particular flyer. Do you really pick the airline because of the loyalty program you belong to? Or do you pick loyalty program because of the airline you typically fly? You end up joining Jet Blue loyalty program because you like to fly Jet Blue because they have nice planes (while you’re at it, you don’t certainly wouldn’t mind earning miles toward a free flight). You end up joining American Airline loyalty program because well, you live in an American Airline hub. 99% of the flight you take end up being AA flight anyway. Etc. Etc.
This works the same way with the restaurant punch cards. You get the punch cards because you plan to go back to that restaurant anyway. It either has good food, at a good location, offer good service. Whatever the case may be, they offered you value. You like the place, plan to go back, don’t mind earning a free sandwich or whatever in the process. In these cases, the loyalty program becomes a “customer appreciation program”, which actually I believe is how loyalty programs started. And there is who doesn’t like being appreciated. But I feel that the incremental loyalty generated is marginal at best.
Most “loyalty” programs are data collection programs. Many store know that you’re looking for value. They give deals only to loyalty card members. They are trading deals for information. Information that they can use later for direct marketing, for better merchandise planning, etc. Is it through those auxiliary efforts that maybe (big maybe) some loyalty is built through being a better store offering better products, etc. The problem is while they all collect this data, few go through the vigor or have the organizational structure to mine and leverage this data to its full potential.
I love this! Yes, that’s my purse! and that video is a lot like my trader joe’s –although the managers/clerks at “my” trader joe’s are WAY friendly and they let me take my cart to my car and even offer to bring my groceries too, carry my kid there, cleaned up the cheap wine bottles he broke when the cart he was pushing cut the corner too close etc. etc. etc. I’m _totally_ loyal and love is not too strong a word for how I feel about TJ’s! 🙂
And TJ’s actually succeeded in getting me to change my behavior and remember to bring my own bags…not by penalizing me by charging me for bags like whole foods, or giving me a credit like Giant, but by letting me fill out a tiny piece of paper w/ my name/phone #/clerk’s name/month to try to win a free bag of TJ-selected groceries … I’ve never won, yet I remember every time because it gives my son him something to do while he waits through the checking out of our groceries and teaches him the names of all the clerks, gives him practice writing in teeny-tiny letters and practice recalling his phone #.
Love the insight on loyalty and the video. Amazing when you think about it. I guess if you think about it they should rename the cards to what they truly are and that in purchase tracking cards.
This is a beautiful example. I was once behind a lady in line who had punched a hole in each of her cards and kept them on a ring. The ring was literally about 5lbs of weight. Keeping track of these loyalty cards is largely pointless to the consumer, myself included. I carry the card only because I’m being bribed to use it. I understand that I’m selling my personal data for the sale prices that the card gets me, but in no way does this mean that I care even slightly about the store. I’d just as easily head across the street if the sale price is better.
In my area they checkers used to give a “courtesy swipe” if you lost your card. They’ve cracked down now and don’t do it. There were times that I gave my card to the person in line ahead of me. That’s gone too now. If you use your card more than once in a short period of time it gets rejected. All this has soured me on these cards, but you know what? I’ll use them as long as I get something in return.
Great commentary this week, many thanks! Fascinating perspective on the varying value of loyalty programs and also the important reminder that data collection is the primary motivation for many of these loyalty cards.
This week’s print goes to Jeannie. She raises some important nuances on how these programs work in practice. Many retailers forget that data collection is a means to an end, and that end should be a better customer experience (better merchandizing, better communication, and ultimately stronger loyalty). They don’t make use of the data they have.
I think some brands need to be reminded how true loyalty looks. They should question whether their loyalty programs are actually helping that aim (even if they’re mainly in it for the data).
Rob Cottingham says
Smashing, smashing cartoon, Tom. And listen, I’m happy to start being completely loyal to one store as soon as they’re willing to stop seeing other customers.
Businesses spend thousands of dallars recruiting new customers but spend very little to retain existing customers. A monthly newsletter with rewards to customers who have given permission to be in the company data base is a very inexpensive option for all businesses to consider. This option also provides an opportunity for businesses to network with one another.
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Nestor Portillo says
I was reading this post and all the comments about loyalty programs my opinion is that people abused of this marketing channel and the cartoon really represents the real world.
At the same time I got this post in my RSS reader
The end goal is re-purchase and activism. This is when a loyalty program makes sense e.g.: Harley Davison where their customers are not only loyal, they practice activism looking to evangelize other about the experience