At Brandmovers we're firm advocates for relationship-based customer loyalty program, not transaction-based. The concept is simple: relationship-based loyalty is focused on value, engagement, and mutual benefits, while transaction-based loyalty is simply that -- loyalty determined by the number of purchases a customer makes. But what happens when customers aren’t making a purchase? What reasons do they have to keep interacting with your loyalty program?
Even if a loyalty program is currently more aligned to be transaction-based, there are things brands can do to incorporate more relationship-building customer engagements within the program itself. Here are examples of relationship-building tactics from real-life loyalty programs.
Focusing on customer engagement through surprise and delight
Chewy is an online retailer that sells pet products, and from the beginning it has cultivated a reputation for building strong customer relationships. This is because as an organization Chewy understands their customers on a deeper level and uses that understanding to create highly personalized interactions. A majority of pet owners consider their pets to be important members of their family and Chewy reflects that shared mindset across the entire company, from its product offerings to its 24/7 customer service portal.
Despite being an online-only retailer, Chewy has forged a loyalty customer following by embracing the “neighborhood pet store” mentality. This means they build relationships with customers by offering the same type of customized product recommendations and solutions pet owners would normally get from the knowledgeable experts at their go-to pet store. Anything pet owners might need, from medications to training products to food recommendations for older pets, Chewy can provide.
But where Chewy really shines is building loyalty through very personal, one-on-one customer interactions; new customers get handwritten notes, and all customers get mailed holiday greeting cards. One of the best examples of how Chewy uses customer information to create highly personalized touch points are the free oil-painting pet portraits that Chewy sends to random customers as a surprise-and-delight. Customers who upload pictures of their pets to their account or submit them to customer service reps could eventually find themselves receiving a surprise oil painting of their beloved pet. The responses from Chewy’s customer base have been overwhelmingly positive and the company itself has grown since it’s launch in 2011.
These types of relationship-building tactics from Chewy are examples of how creating a branded, personalized shopping experience for customers can be a powerful strategy, and does more to build customer loyalty than just discount codes.
Making it easier for customers to manage their health and wellness
In 2020 Walgreens made major changes to its loyalty program and its mobile app with the focus on addressing customers’ most pressing needs. To best serve customers who were quarantined and following social distancing measures due to the COVID-19 pandemic, Walgreens relaunched its loyalty program myWalgreens to include an expanded list of customer-centric benefits, such as:
- The ability to search and book vaccination appointments and medical appointments online
- A 24/7 pharmacy chat
- Expansive offerings of different health and wellness products that can be picked up in-store, curbside, or through the Walgreens drive-through services.
- Exclusive “only for you” deals for program members
Walgreens also partnered with at-home delivery services Doordash and Postmates so customers can get their products delivered without having to leave their homes.
Walgreens' initiative to reinvent and improve its existing loyalty program to better benefit its members during a time when many people were facing hardships is a prime example of how loyalty programs should focus on providing value for customers. If a loyalty program’s current member perks or benefits are no longer serving the needs and desires of its members, then there’s a risk those customers will begin looking to other competitor brands to fulfill those needs.
In addition, Walgreens also made a point to add benefits that specifically reinforce its focus as a health and wellbeing-centered loyalty program. Health was the top focus for consumers in 2020 and by making it easier for customers to utilize its wellness-focused benefits Walgreens showed that as a company it places customer concerns and goals at the forefront of its priorities.
One mistake brands sometimes make is adding “fluff” benefits to their loyalty programs. These are perks that look good on paper but add no real value for the brand’s customers. In comparison, Walgreens redesign of its loyalty program and benefits was solely to continue supporting its customer relationships in the best way possible.
Utilizing a mix of both generic and member-exclusive benefits
Tiered loyalty programs - programs that offer participating members increasingly more benefits and features as they advance through specific status or member tiers - are already proven as a successful type of loyalty program. The gamification aspect and allure of exclusive perks for higher-tier members is a great motivator. However in some cases it’s better to offer specific types of benefits to all members rather than a select few. This is especially true if it’s a benefit that every member can use. For example, while not every program member of a clothing retailer would want to participate in a VIP one-on-one styling appointment with a brand employee, the majority of program members probably would take advantage of free shipping.
This is a concept that donut-corporation Dunkin' Donuts understood in 2019 when it made some major switches to its loyalty program and app. One of core changes was expanding mobile ordering to all customers. Before, on-the-go mobile ordering was only available to DD Perks members who paid for their purchase with an enrolled gift card. Now every customer could place mobile orders through the app and select their method of payment. Along with this change, DD Perks members were also able to earn points for every eligible purchase by having their loyalty ID QR code scanned before the transaction, which removed the requirement to use an enrolled gift card as payment.
While it may seem counterintuitive to start offering a member-only benefit to every customer, the purpose behind these changes was to evolve the shopping experience for every type of customer. Both new customers and DD Perks members received more flexibility to choose how they want to order and pay, while earning points and rewards became significantly easier for current program members.
A major driver of this change was direct feedback from Dunkin' Donuts customers, who wanted more convenience and customization when it came to ordering and purchasing products. As with any type of relationship, communication is critical for any brand looking to build long-term customer loyalty. By listening and incorporating this type of customer feedback directly to improve their program, Dunkin' Donuts was able to elevate their program participation and growth rate. By the end of Q2 for fiscal 2019 the average weekly sales for mobile ordering had increased by 30% and 1 million new members had been added to the loyalty program.
One key takeaway from this is how Dunkin' Donuts was able to fine-tune their program design and member benefits in ways that not only made it easier to acquire and retain customers, but also allowed them to gain more customer data around subjects such as locations, shopping preferences, and products. This in turn better enabled Dunkin' to incorporate more member personalization into their loyalty program. Offering more generic benefits (like mobile ordering) to every customer opens opportunities to provide more customized and personalized offers to specific customers. Which is exactly what Dunkin' did: program members receive special incentive bonuses during new product launches and can get tailored offers based on geo-location criteria, among other member-only perks. These types of personalized incentives do more to help build customer-brand relationships than genetic incentives do by far.
The three companies above each have their own tactics and strategies for growing their customer relationships. At the core of every example is the fundamental focus on the customer; engaging the customer outside transactions, providing more value to the customer, making the customer's lives easier, etc. How brands decide to incorporate their own relationship-building tactics can depend on the nature of the brand itself and how its business is run. For Chewy the surprise-and-delight pet portraits helps to connect with customers emotionally. For Dunkin' Donuts the direct use of customer feedback to dramatically change and improve its loyalty program helps generate positive feelings in customers who enjoy supporting a brand that listens to them and prioritizes their experience.
If you're looking for ways to build better customer relationships, Brandmovers can help! Reach out to us today.