Loyalty beyond points … Patagonia finds a better way to engage its consumers in what they really care about

May 4, 2019

Almost 30 years ago I remember being part of the team launching the first frequent flyer program from British Airways. AirMiles, the points scheme, and Executive Club, the tiered benefits program, were groundbreaking at the time.

Yet for many years I have now cringed at the supermarket shoppers dutifully scanning their “loyalty” cards for a fractional discount or reward coupons. It doesn’t really feel like loyalty when you have a wallet full of every store’s card.

It’s time for loyalty to evolve from a transactional system to a personal, dynamic relationship between brands and their customers.

Now that personalization has become the norm, we want to feel known by the brands we choose time and time again. And as we give brands greater access to our data and our wallets, we expect more from these relationships.

We’re willing to commit to brands that get this right and are not particularly tolerant of those that don’t. In a 2016 survey, Facebook found that 77 percent of people say they repeatedly buy from their favorite brands. Forty percent tend to be repeat buyers but would choose another brand that offered a better experience. Thirty-seven percent, meanwhile, say they make purchase decisions rooted in their emotions.

Additional research shows how our attitudes about loyalty programs are changing from the transactional models popularized by airlines, retailers and restaurants in the 1970s and ‘80s.One study found that 78 percent of U.S. consumers abandon loyalty programs after signing up. What’s more, the consumers who stick with these programs don’t necessarily feel loyal over the long term. A 2013 survey found that two-thirds of people who achieved the highest airline loyalty status said they’d be open to switching to a competitor. Today loyal consumers are motivated by memorable experiences and emotionsrather than points, discounts and perks.

Here are three brands that are rethinking loyalty from their customers’ point of view and evolving their approach beyond a transactional points program.

1. Patagonia stands up for its values, time and time again

We’re attracted to brands that share our values—64 percent of consumers saythis is the main reason they have a relationship with a brand. Few companies exemplify a commitment to values more than Patagonia. Its dedication to sustainability is evident in everything from its marketing campaigns to its repair policies to its bold actions in response to the Trump administration’s redesignation of Bears Ears national park.

The people who work at Patagonia, from the CEO to sales clerks, strongly believe in the company’s ethos, and these efforts have paid off—the “Don’t Buy This Jacket” campaign led to a 30 percent increase in sales, and the 2016 pledge to donate its Black Friday proceeds to environmental charities garnered a record $10 million in sales.

When a consumer trusts that a business stands for something greater than making money, then we’re much more likely to support it.

Read more about Patagonia

2. Sephora connects beauty lovers with personalized and exclusive services

Sephora’s Beauty Insider program might seem like a typical rewards program on the surface; every dollar spent translates to a point. Look closer, however, and you see that the program is all about building relationships by offering personalized recommendations, exclusive services and trusted advice.

The highest tier of the loyalty program includes access to custom makeovers, beauty classes and a private hotline with a beauty adviser. While the free samples are a plus, the purpose of the program is really to make you feel special and valued. It’s working—17 million people are Beauty Insider members in North America alone, and these customers drive 80 percent of the company’s overall sales.

Whether or not you’re a member of Sephora’s Beauty Insider program, you feel personally cared for when you visit their website or one of their stores. If you don’t know where to start with skincare products, for instance, you can fill out an online quiz and get recommendations based on your age and skin type. If you’re in a store looking for a foundation that matches your complexion, an associate will find you a match using their Color IQ tool. These personalized experiences keep customers coming back to find new products and restock on favorites.

Read more about Sephora

3. Dollar Shave Club communicates proactively with its members

You’ve likely heard of Dollar Shave Club, a subscription service for grooming products, because of its witty ads and irreverent content. The lesser-told story of Dollar Shave Club is one of cultivating loyalty; the company has built a base of more than 3 million repeat customers in five years by ensuring its members feel like they’re a valued part of something unique.

Case in point: After you sign up as a Dollar Shave Club member, you receive a welcome email that explains how to make the most of the service and get access to benefits like an on-call grooming concierge. The company recognizes that this communication helps to build trust and inspire loyalty, differentiating its brand from other shaving and skincare options.

Our expectation for this kind of communication is increasing as companies like Dollar Shave Club set the bar for our experiences with brands. My company, Narvar, recently surveyed U.S. consumers and found that 83 percent expect regular communication about their purchases, up from 75 percent in last year’s survey. Even a straightforward acknowledgment can help to build an emotional connection. When asked what would make them more satisfied with their purchase, 61 percent of consumers said “a simple thank you.”

Read more about Dollar Shave Club

Consumers are looking for reciprocity, which means brands should treat us in ways that demonstrate their loyalty. In the age of consumer choice, loyalty is a central part of our experience with a brand. To build this loyalty, brands must be able to foster direct connections with us as customers before, during and after every purchase. This means communicating proactively and effectively, taking a stand on issues that matter to their audience and prioritizing personalization over points.

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