Is a Loyalty Program Necessary to Create Customer Loyalty?

January 21, 2016
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Is a loyalty program necessary to create customer loyalty? This is a really interesting question that I was asked last week, and it really got me thinking. I started to dig deep and think why we are loyal to certain brands and companies. My findings were interesting!

The more I thought about it, the more I realized that a loyalty program is not necessary. This may sound strange coming from someone who works for a loyalty program provider, but hear me out. While a loyalty program is not necessary, it does make things a hell of alot easier. Let me explain why I believe customers give you their loyalty, and how a loyalty program can help.

 

 

Why Do Customers Give You Their Loyalty?

Let me start extremely general here. Customers will become loyal to you as they move through the customer journey. No one is going to land on your site and become loyal to you right away, it is a process. At the end of the day loyalty is an emotion that people feel.

loyalty program necessary loyalty is an emotion

Your store needs to create an emotional attachment to your customer if you want to earn their loyalty! Tools like a loyalty program will help, and can even replace the emotional desire with a logical reason to give you loyalty (more on that later).

 

 

How Do You Create That Emotion?

If you want to gain loyalty you need to focus on creating positive emotions. Lifeless stores and brands rarely generate customer loyalty. Let’s look at two big corporations that have an almost cult following as an example.

loyalty program necessary disney apple

Disney and Apple are great examples of playing the emotional game. Sure they have great products and services, but that is not what makes them great. When you think about these companies you almost certainly feel some sort of happy emotion or positive association. This is not an accident, it is by design and that is why they both have millions of loyal customers.

loyalty program necessary create positivity

Getting your store/brand to this level will be a long road, but we can look at a few ways to create an emotional attachment. Humans feel emotions, not stores and brands. You need to give your store or brand a human element to create emotional attachments. You are not going to create loyalty with pricing or an effective supply chain.

1. Become Their Expert

One way to create loyalty is to become your customers expert opinion on what you sell. This is usually done through a content marketing strategy, giving tutorials, how to’s, and expert opinions. When you establish yourself as the expert in an industry your customers trust you.

 

 

When your customers trust you and your recommendations they become loyal to your opinions and the products you offer. This is becoming an increasingly popular way to establish loyalty and create sales. 

Being the go to resource for information creates a very real relationship that a customer is will to become loyal to, it is also very difficult for another competitor to take that relationship away.

2. Be Who They Want To Be

This is similar to becoming the expert. In this strategy you are aiming to establish your brand as the ideal that someone is trying to achieve. Luxury brands have been doing this forever, there is a reason when someone buys a Lexus they usually stick with the brand (loyalty).

loyalty program necessary luxury status

You can also do this as a smaller store by creating a website that appeals to who your customers want to be, as well as using instagram and pinterest to create a lifestyle your customers are looking to achieve.

If you become the brand that gets them (or at least makes them feel) to where they want to be in life you will get extreme loyalty from your customers.

3. Be Human

Today’s shoppers want an experience when they shop! They are also looking to shop from real people. The automated and robotic ecommerce sites of yester-year just don’t cut it anymore. Shoppers are looking for a face or person they can establish a real human relationship with. This ultimately extends to your brand and store as well.

loyalty program necessary build real relationships

This is the easiest way for smaller merchants to create loyalty. Get yourself involved and visible so that’s shoppers can see your hard work and determination. The human relationship creates a strong emotional attachment which can lead to customer loyalty if it is strong enough.

4. Be Helpful

If all shoppers cared about was price then no stores besides Amazon, Wal-Mart, and Alibaba would exist. Clearly there is something else out there that shoppers crave. For a lot of shoppers that is an amazing customer experience.

The best example of this is Zappos! They provide unrivaled customer experience and that grew them into the online retail giant they are today. Below is a video that explains the Zappos strategy.

 

 

A great example of the power of service is a local TV store in Waterloo (my home town). My girlfriend's dad went to go buy a new TV and noticed that the TV he wanted was 200 dollars cheaper at BestBuy than it was at his usual TV store.

This didn’t matter to him at all, his past experiences with the local stores service swayed him to select his “usual” store than to go with the $200 savings. He was loyal to the way he was treated in the past. Never underestimate the power of service in loyalty!

 

 

Where Does A Loyalty Program Fit In?

Let’s get back to the original question: “Is a Loyalty Program Necessary to Create Loyalty?” I said that it is not necessary but I would still strongly recommend one!

A loyalty program is a good supplement to all the ideas presented above. It can even help you build loyalty while you work on one of the strategies above. None of the emotional strategies will happen overnight, they will take time and a strong commitment. A loyalty program can help you in the meantime.

loyalty program necessary work together

A loyalty program gives a tangible reason to return and shop with you, a component missing with strictly emotional tactics. When a shopper is given points they are basically given a cost to shop somewhere else. If they choose to shop somewhere else they are forgoing those points which have value. This is very difficult for most to do.

loyalty program necessary reason to return

When a shopper has an emotional and monetary reason to return to shop, that is when you have truly got them hooked. If you have a loyalty program and amazing customer service you have created the strongest form of loyalty!

 

 

Is a Loyalty Program Necessary?

So back to the original question. A loyalty program is not necessary to create customer loyalty, but it does make it a lot easier. The other tactics I listed are very difficult to track their effectiveness, and are very difficult to quantify. A loyalty program makes it much easier to measure customer loyalty, and provides a few other benefits.

Benefits of a Loyalty Program:

  • Easy to track effectiveness
  • Easier to start and maintain
  • Great compliment to the above strategies
  • Fits into a total retention strategy
  • Creates tangible reason to stay
  • Super effective for ecommerce stores

Before you decide whether a loyalty program is or isn’t right for your store I recommend reading “Is a Loyalty Program Right for Me.” This is a checklist that will help you discover if a customer loyalty program is a good fit for your store’s unique needs.