Welcome to Experience TV, a LIVE show on social channels about the economic revolution we’re living through, the Experience Economy, where brands compete on the quality of their customer experiences.
Episode 9 explored the role of loyalty marketing programs with my special guest, Clay Walton-House, Managing Director, Integrated Loyalty Solutions at PK.
Watch below, and read on for a full recap.
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Loyalty programs are more popular than ever
As brands in every industry face more competition, customer loyalty is becoming harder to earn. This means brands need to think out of the box to keep customers coming back and engage them beyond their purchases.
This is the domain of loyalty programs, from the traditional points-based reward systems to fully-fledged membership experiences.
Some of the most notable programs right now are:
- Amazon Prime, with over 100M members
- Sephora Beauty Insider, with 17M members making up 80% of annual sales
- North Face’s VIPeak program (bonus points for the clever name)
- Starbucks Rewards with 17M members
I’m a daily user of the Starbucks Rewards experience on my mobile device. As a shopper, I tend to compare every other loyalty program against the very high bar Starbucks sets.
I’m not alone! Oracle’s “Marketer’s Guide to Brand Loyalty” reveals that 71% of consumers are active in between one and five loyalty programs every month, with a further 56% using at least one loyalty program app on their phone (like I do with Starbucks Rewards).
What’s more, 68% redeem rewards at least once a quarter.
Three brands making recent strides to improve customer loyalty include LEGO, Disney, and Vitamix. Read more about these and other loyalty marketing experiences in this guide on the Oracle blog, “The Top 5 Innovative Loyalty Programs of 2020 and Why They Work.”
LEGO is loyalty-obsessed
LEGO’s loyalty program recently relaunched to great fanfare, winning a Loyalty360 Platinum award for Incentive and Reward design. Key to its success was inclusivity; rather than focus only on passive rewards for high spenders, the beloved toy brand proactively rewards experiences across several price points and buyer types.
“With so many ways to earn and redeem, everyone can have an experience that makes them feel like a VIP.” – Jessica Kaufman, senior product marketing manager, Oracle
Disney goes deep on customer insight
Disney Movie Insiders is the loyalty program for Walt Disney Studios, spanning Marvel and Star Wars to Pixar films. One of its key benefits (and a key benefit of all member experiences) is the discovery of customer insight to deliver a better customer experience. Disney Movie Insiders builds progressive member profiles regarding household makeup, movie interests, viewing preferences, and more.
Ruth Walker, VP of CRM at The Walt Disney Studios, was recently interviewed during Oracle Live with Lisa Joy Rosner, SVP of brand and digital marketing at Oracle.
“Typically, at the studio, we’ve looked more at franchise affinity, so Marvel, Star Wars, and Pixar. However, I’m really excited about going even deeper and learning more about our members in terms of their need states, why they buy movie tickets, and when they buy movie tickets. That’s going to allow us to be more personalized in our communications with them. Also, the kinds of offers that we feel at an individual level a member’s going to like.”
Data like this enables brands to be more relevant with each customer. With the broader crackdown on cookies and third-party data that’s happening in the industry, loyalty programs are emerging as a key source of first-party customer data.
Vitamix engages members beyond the sale
Vitamix Rewards is a free loyalty program for Vitamix customers. Members can earn points by registering a product, uploading receipts from wholesalers, or engaging with exclusive content.
During the pandemic, the brand launched a content initiative that wasn’t focused on sales messaging but instead on healthy eating, helping customers incorporate whole foods into their diet using their Vitamix.
They even released a recipe where customers could use their Vitamix blender to make their own hand sanitizer (all you need is isopropyl alcohol, vegetable glycerine, hydrogen peroxide, and optional essential oils).
The results of this program are impressive:
- On average, the team saw a 31% greater average net order value for members compared to non-members.
- It was also a goal to capture product registrations to understand the customers buying at retail. Since going live, Vitamix has seen a 30% increase in product registrations.
If you’re interested in learning more about this loyalty program, watch an interview with Sarah Herrmann, manager of direct to customer marketing at Vitamix.
Loyalty Drives Customer Relationships: Interview with Clay Walton-House
Clay Walton-House is the managing director of integrated loyalty solutions at PK, a digital services firm helping clients design and build leading customer experiences. Here’s a brief review of my conversation with Clay as he shares how loyalty improves customer relationships.
Q: Tell me about the role loyalty programs now play in today’s world of pandemic-living, database churn, category-switching, and ecommerce?
A: Even before the pandemic, there was a fundamental shift occurring in the loyalty space. The old-school model of loyalty programs and rewards programs was already changing pretty rapidly. Now, what we see today, and the reason we talk about membership through a more holistic lens, is value provided to members in a number of different formats.
That could be exclusive content or access to communities, or it could be services that are value-added or member exclusive. Brands are now designing into a member experience. That’s really the big reason we see these programs playing such a strategic role in this broader direct to consumer (DTC) landscape and what brands are doing to stay relevant.
Q: What brands are delivering value through membership experiences?
A: When you take a look at Nike as a business over the last few years, what they’ve done is made massive investments in their owned and operated channels and the experiences that they can deliver to their customers. They’re trying to make what’s a very large global audience more addressable in terms of direct marketable relationships.
The Nike Membership program doesn’t have points. It’s not a traditional points-based program, but it’s centered on the idea that everyone’s an athlete. There’s access to things like virtual coaching sessions through a partner network, a class pass to attend local fitness classes, and access to educational resources around nutrition. Then there’s a whole digital ecosystem of apps that Nike has developed, all of which members can access and utilize that provide functional value, whether you’re a member of the Nike Run Club, or if you want access to sneakers that drop early if you’re a sneakerhead.
They’ve built an ecosystem of member services and experiences that truly are the Nike brand manifested. I think that’s super fascinating as you reflect on the broader opportunity for how membership models can evolve in the space.
Q: Is this the future of loyalty and membership programs?
I think so. When you look at Amazon Prime, for example, this is an organization with entire teams devoted exclusively to the evolution of that program.
This is a hot topic in the loyalty space. Some would debate Amazon Prime is a subscription, not a loyalty program.
My point of view on that is always: Does it inspire loyalty? Does it drive increased engagement? Does it drive lifetime value? Does it help address churn and increase retention?
If you answer yes to those questions, it’s a loyalty program.
You can call it whatever you want, but you have to be a member to access those benefits, and those benefits of membership inspire loyalty. Amazon Prime and Starbucks Rewards are two examples of programs, like Nike’s, that have regularly evolved the offering of membership and done so with an eye toward how it serves their broader DTC business.
Q: What’s your favorite loyalty program, personally?
A: The outdoor retailer REI has made some major investments here. They think about membership and delivering value to their members in a more holistic way. That includes things like travel services, value-added content, equipment rentals, and trade-ins.
Once you’re a member, you have access to all of these really rich experiences and services that are all about helping people get outdoors and enjoy themselves. I think that it’s a great example that’s all about these things we’ve been discussing; 100% brand-aligned and very value-added.
This interview has been condensed for clarity.