What makes a consumer loyal? There really is no magic formula, and brands are spending serious money on strategies before truly answering this question. Rewards programs are one big category attracting a lot of attention and dollars, yet they don’t always deliver a payoff.
Rewards and loyalty often get merged, but they’re not the same thing, said Stephen Goodrich, CEO of ZipLine. What makes a consumer loyal may not be the things brands expect. Even consumers themselves may be surprised by what it truly takes to win – and then keep – their hearts.
Going back to the basics helps answer this question. Customers must first know, then grow to like, and ultimately trust a brand before joining its loyalty program. An individual who participates in this type of program trusts the brand and therefore expects the program to make sense to them individually. They should be able to easily answer the question, “Why do I like this brand?” The rewards further help solidify their loyalty.
Rewards, though less traditionally, said Goodrich, can also serve as a way of introducing the brand to the consumer and getting them to pay attention to this brand instead of that one. For these reasons, it becomes even more important for brands to get it right with their loyalty programs.
So, what does it take to get customers saying, “I’m a Dunkin’ Donuts guy” or “I’m a JetBlue girl?” Goodrich said it comes down to experience. Truly loyal customers, he said, have an emotional connection to the brand, which is driven by experiences the retailer has delivered.
In a recent interview with Karen Webster, Goodrich dissected the elements of loyalty and how retail brands can achieve it.
Goodrich said the number one tool for breeding loyalty is a strong brand identity. The examples of Dunkin’ Donuts and JetBlue are just two of many that show how strong branding and a positive customer experience can drive high repeat business. This is in addition to delivering on what they stand for, as well as meeting – and hopefully exceeding – the consumer’s expectations.
Close behind branding, said Goodrich, is analytics. Data is powerful, enabling brands to target consumers based on their needs and to deliver relevant rewards. He noted that rewards “aren’t delightful if they don’t matter.” Is the brand catering to the individual’s needs and wants through rewards that make sense? Are they making it as easy and painless as possible to buy from them and cash out their rewards?
Rewards that matter, Webster chimed in, don’t have to come in the form of cash back. The reward may be getting something extra that day or receiving a notification that an item on the customer’s wish list has become available. The latter, of course, requires a payments element to facilitate – which hearkens to the third most critical tool for loyalty.
Finally, a system is needed that folds rewards into the payment process so they don’t become separate events at the point of sale, which Goodrich said creates friction and becomes a chokepoint. This process should be as seamless as possible through payment-powered loyalty. Goodrich noted that it all relates back to delivering a positive consumer experience.
Combining payment and rewards furthers the emotional connection between consumer and merchant, building even more affinity for the brand. Merchant-centric payment and loyalty is a strategy that some brands are adopting to deliver targeted rewards catered to the individual, and Goodrich said he expects to see more of this over the next year.
Creating Cumberland Farms Guys
In the past, choosing a gas station may have involved searching for the lowest price, a most-convenient location, clean facilities or perhaps the one that sources petrol in the cleanest fashion, if the customer is environmentally conscious. This is not a decision that has traditionally been based on brand.
Yet that is exactly what Cumberland Farms introduced with its rewards program, said Goodrich – one that truly translated into brand loyalty in the unlikeliest of categories: gas stations and convenience stores. The result is that customers go out of their way, literally and figuratively, to choose Cumberland Farms.
The chain’s SmartPay option has become the number-one payment method at Cumberland Farms locations, surpassing even Visa. Some stores enjoy penetration as high as 50 percent, Goodrich said.
What Cumberland Farms did right was to create an experience akin to paying for a coffee at Starbucks – simply scan the mobile app to pay, with payments happening automatically and invisibly in the background. Keeping the customer experience as their number-one priority has sparked the success of the program.
Amazon Go makes a similar value proposition, Goodrich added. Customers walk in, do their shopping and walk out without ever visiting a register. This, he said, is the direction payments are headed, and Cumberland Farms’ success with SmartPay is just another example.
Emotional Connection Is Key
A consumer values a discount at the pump, said Goodrich, but that alone is not why SmartPay has taken off. It is successful because of the strong emotional connection to the brand, prompted in part by the payment program. It’s the whole experience: recognizing the consumer at the pump, ease of use, coupled with a reward that makes sense to the consumer. “They know me…”
Rewards can introduce and help retain consumers to a brand, but it is the total consumer experience that creates the brand equity and, consequently, fierce loyalty.
Proving the point, Goodrich noted, are other retailers offering a smaller reward than Cumberland, but enjoying the same or greater adoption. That, he said, illustrates how important the experience can be when it comes to loyalty.
The bottom line is that loyalty is rarely about the product or a discount. Most consumers can’t tell the difference between Shell and Sunoco — gas is gas, after all — but it is about the way the brand makes them feel. It’s about the experience, the emotion it evokes through delivering meaningful rewards and offering the most convenient system possible.
Many brands miss a significant opportunity, Goodrich said, by failing to understand the importance of building an emotional connection with their customers.