The missing ingredient to loyalty marketing

It’s been 29 years since American Airlines launched the modern era of loyalty marketing with introduction of the AAdvantage frequent flyer program.  With so much experience in loyalty marketing across industries, you would think that practitioners would have it down pat.  Unfortunately, that’s not the case.  In many loyalty programs, there is one key ingredient that is missing…….emotion.

What I mean by that is loyalty marketers, more often than not, focus on the transactional element to a loyalty program.  In other words, they focus squarely on the exchange of loyalty currency (points, miles, etc.) for customer sales.  Similarly, communications and promotions center around incentives like bonus point offers in order to drive transactions.  In this manner, loyalty programs are merely sophisticated – and expensive – forms of discounting.

The real value of a loyalty program lies in the ability to gain customer data and build a relationship based on customer intimacy.  That is, to know each customer so well that you can anticipate his or her needs and offer the right solution to at the right time.  A solution may be a product or service for which they pay, but it can also be new financing options, new payment terms, expedited shipping, informational content or any number of non-product solutions that meet a need.

Where does emotion come into the equation?  Companies that truly understand their customers know how to build an emotional connection through targeted communications.  For example, a newsletter from a theme park to a retired couple can highlight the wonderful family memories that can be created at the park when family comes to visit.  It can also take the form of a congratulations letter from a mortgage lender that compliments a first-time homebuyer on achieving the American Dream.  Even cross-sell contacts can leverage the power of emotion to create loyalty.  A bank may send an e-mail to young parents reminding them to protect their child’s future by starting a 529 college savings plan.  Done well, the creative will have the customer think “they’re looking out for me and my family” rather than thinking “they’re trying to sell me something”.  The key, though, it to have customer data on their needs, lifestage, and attitudes in order to hit the right emotional triggers for each consumer.

Loyalty currency is not unimportant.  It plays a central role in encouraging program enrollment and ongoing engagement.  And using loyalty currency for promotions to drive short-term behavior is warranted in many cases.  However, customer rewards should not be the only aspect of a loyalty program.  Recognition and relevancy are more important in build sustainable loyalty.  In other words, win – don’t buy – your customers loyalty.

The take-away:  analyze your existing loyalty efforts to determine if  a) you have enough customer data to identify emotional triggers for each segment or individual and b) you are incorporating compelling, relevant, emotional messages into your loyalty communications.

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