From Apps to “Soft Benefits,” Here’s How Brands Can Cultivate Customer Loyalty

Kate Spade Saturday

The proclivity toward loyalty programs changes across different markets.  According to Bob Macdonald, the president and CEO of Maritz Loyalty Marketing, recent studies reveal that there’s work to be done on “soft benefits,” i.e. rewards for non-purchase signals of a consumer’s brand engagement.  Scott Robinson, Maritz’s Senior Director of Loyalty Consulting, elaborated on how brands and labels can drive loyalty through non-monetary recognition.

The average consumer has 7.4 retail loyalty cards (“card” being physical or digital) but only uses 63% of those.  There’s a need for differentiation, “in a market that relies heavily on monetary means of influencing behavior,” Robinson explained.  “Things other than ‘points’ drive behavior.”  For fashion brands in particular, Macdonald and Robinson think it’s key to cultivate loyalty via benefits beyond just points for purchases.

BaubleBar loyalty programBaubleBar is among retailers offering rewards for activities besides making a purchase.

Maritz’s study found strong evidence “that customers are expecting recognition for behavior beyond a purchase — advocating for the brand, posting reviews online, etc.”  We can think of a few retailers who actually cater well to this expectation — Gilt Groupe offers points, good toward eventual discounts, for logging into the site daily and sharing purchases on Facebook, while Kate Spade Saturday rewards customers who share items on their social networks or “favorite” products on the site.  (Of course, both retailers award points for actual purchases, but that’s a given.)

Beyond that, one of the keys to program differentiation is tailoring programs to suit customers on an individual basis.  Enter the importance of data collection.  Maritz created a continuum, “from cool to creepy,” to calibrate how customers felt about the use of their information.  Notably, they found that “regardless of gender, age, or income, the percent of customers who are generally concerned about privacy is the same.  We expected the Facebook generation to be less concerned, but they weren’t.  What differs is how comfortable customers are with specific use of their information,” Robinson explained.  “One of the ways fashion brands can connect is on Facebook and Twitter.  While 53% of participants overall would like to receive benefits for having liked or followed something on those platforms, 65% of the under-35′s find that ‘cool and exciting’ as opposed to ‘creepy.’”

Beyond that, Macdonald pointed out the importance of “value exchange” — basically, that a consumer will provide more information after trust is established.  “Consumers become more willing to progress the relationship, and there are more things they’re willing to give up in exchange for what the brand will give up to them.”

Last but not least, mobile is still key. 94% of Maritz’s 6,000 respondents want communication from their loyalty programs, but at this point, only 53% think the communications they’re already receiving are relevant.  Meanwhile, almost three-quarters of customers who use smart phones and tablets would be interested in loyalty programs through these devices, and a whopping “91% said they’d be into downloading a loyalty app.”

Building an app just for a loyalty program might sound like a lot, but it’s imperative for high-end fashion brands to engage consumers this way. Maritz’s studies found a direct link between affluent households and the proclivity toward loyalty programs. “Households with more disposable income might just be shopping more.  Therefore, they can derive more benefit because they’re spreading more income across a larger number of programs,” Robinson pointed out.  As a retailer, you wouldn’t want to be the one offering the loyalty card that sits in the wallet, unused, would you?


4 Responses to “From Apps to “Soft Benefits,” Here’s How Brands Can Cultivate Customer Loyalty”

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