Desperately seeking Loyalty...
Brands crave loyalty! That's because loyal customers spend more and buy more frequently without the need for expensive communication or stimulation. And the most loyal customers tell their friends about their favorite brands.
Consumers are much more ambivalent. They like what they like on their own terms. Their enthusiasms wax and wane. They want to hear from brands – but not that often. They are governed by a WiiFM (what's in it for me) mentality, even for brands that are near and dear to their hearts. They can be swayed by price offers.
The availability of 24/7 digital, social and mobile communications channels creates new and creative opportunities for brands to communicate and interact with loyal and potentially loyal consumers, which, in turn, creates opportunities for fans to interact, respond and share back. The trick is how, when and using which approach.
The points based system, pioneered by the airlines and expanded by credit cards and grocery chains, seems to have limited appeal as an across-the-board loyalty solution. Few consumers care that much about many brands. Few are willing to amass points to buy Timmy a bike or trade 80,000 points for a microwave. Consumers' appetites for a monthly statement of points accrued and catalogs of shiny prizes to be redeemed have diminished.
The digital sensibility seems to rest on a critical consumer expectation. DiFM (do it for me) expects brands to understand what consumers do and want and to intervene with rewards and offers at the appropriate inflection points. These inflection points can be planned and communicated in an easy-to-understand way (e.g. 5% cash back) or spontaneously; which tend to surprise or delight customers usually at the point of sale.
Similarly the DiFM idea demands that brands create or aggregate deals and offers and automatically communicate them and/or apply them in relevant circumstances. For grocery stores this means -- find all the coupons for stuff I buy, put them on my loyalty card and automatically deduct the discounts when you ring me up. For other retailers, it means automatically deduct deals and discounts and apply whatever rewards I've earned in the moment, when I'm making a relevant purchase. And while the systems requirements to deliver on this expectation are significant, consumers don't care. If you are not proactively taking care of them, all the cards, points and promises in the world don't matter.
The new digital formula for loyalty programs is WiiFM + DiFM.