by Erna George. I’ve been reading Professor Byron Sharp’s book, “How brands grow”, which challenges marketers to take a more scientific approach to marketing. He asserts that loyalty is not a sustainable driver of brand volume growth, calling into question the longevity of loyalty programmes and stating that these may “work a little but have limited impact on overall loyalty”.
Via brand case studies, consumers are described as being variable in brand choice and use. If true, this makes for an interesting quandary for those brands that have a high reliance upon programmes that offer value or rewards for buying more, staying longer or for current users only.
Having written about loyalty programmes previously, I have had to look at them from a different angle. Maybe it’s not about whether loyalty programmes work or not; maybe it’s about whether loyalty programmes do reward current consumers, as well as entice new users to the brand? Have participants in loyalty programmes been loyal consumers or those seeking a quick reward?
Why don’t they reward me?
I know I get annoyed at brands, to which I am ‘loyal’, that offer great rewards (vouchers, prizes, etc) only to those who sign on for new accounts. Why don’t they reward me, who has been with them for so long?
But how loyal am I, really? How frequently do I actually engage with the brand once I have signed up? Despite being a ‘loyal’ customer, there is only so much tomato sauce one person can eat or only so many of the same styles of jeans one can purchase from a retailer.
Recently, someone at work received a Yuppiechef delivery at the office. With it, she received a handwritten card stating that it was great to hear from her again, thanked her for the purchase and asked if her previous buy were still a delight. Upon chatting to my colleague, Yuppiechef is certainly not the only brand she purchases kitchenware from but she certainly enjoys each interaction with it.
That Yuppiechef had someone to look up, reference a previous purchase and handwrite a card feels more like a long-term connection than a purely transactional relationship. Yuppiechef has made many competitor brands feel as if they offer lesser experiences by comparison. [Please note that, in late February 2015, Yuppiechef announced that it would be scaling back on the handwritten cards for reasons of authenticity and sincerity — ed-at-large.]
Lock consumers in
Then there are brands that almost lock consumers in with special deals such as annual subscriptions — sign up for 12 months and pay for 11. These incentive systems will only stay successful if the service and experience are worth it.
Before renewing Sunday Times subs (which comes with The Times daily) recently, I questioned the expenditure as I’d missed out on reading it here and there, and the daily paper has often been so tightly rolled up that, when I try to scan the news, it promptly bounces back into an accordion-like tube structure — completely unreadable.
The ‘over-attentive’ call-centre agent called every few days to remind me to renew; I hemmed and hawed. The last time she phoned, I’d just had a pyjama Sunday when I read the paper with my first coffee before the house awoke (without having had to jump in my car). I signed up again.
Come the first delivery, the daily was, once again, rolled up to the width of a spaghetti strand and, upon contacting the call centre, gone was the attentive consultant. In her place was a non-interested agent who didn’t feel that my request — to ask the delivery person to fold the paper so that I may actually read it — was terribly important.
Several weeks later and I am beginning to wish I had invested in a set of encyclopaedias just to flatten my paper. So, next year, renewing will not be an option, even if an incentive is offered.
It is vital to lock people in with love, rather than handcuffs, for a long-term relationship.
To the max
Then there are consumers who work the brand-loyalty system to the max.
A few years ago, FNB offered unlimited visits to the Slow Lounge at airports for Platinum cardholders. A number of people I know rushed to sign up for FNB cards, not to switch their banking but simply to have this advantage. That FNB now limits the number of visits to the lounge, among other requirements, indicates that there may have been more than the few I know signing up for the card.
So what may have started as a great reward for loyal clients actually may have turned into an unintentional recruitment drive. I do hope that the penetration attained was long-term enough to be worth the irritation to the more long-standing card holders [I remember many complaints on social media about the lounges being overcrowded and too full to get into — ed-at-large].
On a lighter note, a friend told me about a trip to The Point (a mall in Seapoint) on Valentine’s Day. He hates paying for parking at a mall where he is about to spend a fair amount and, upon reaching for the ticket, was pleasantly surprised to find “Free for you to have wonderful Valentine’s Day” taped across the parking machine.
Now, it is unlikely he will be parking there every weekend but, not only has he mentioned this story to many people, each time I have to pay for my parking I remember The Point. Again, it has repositioned what ‘my’ brands do to delight their patrons.
The most successful
Loyalty activities that appear to be most successful are those which people talk about (creating brand awareness) or show the brand’s differentiation from the market and entice new users. So perhaps Professor Sharp has something in his thinking:
- Relying upon a smaller base of consumers to buy more is not feasible as there is a limit to how much a loyalist can consume
- Given we are a young democracy and income levels are diverse, for some brands there are still many untapped consumer segments
- Only enticing and rewarding new users could leave established consumer bases feeling less treasured
Perhaps the sweet equaliser is that promotions or activations must both deliver new customers and delight the loyal.
Erna George is the new director of strategy at Lowe Cape Town. She has worked with diverse brands and categories — from FMCG, alcohol and agriculture to financial services and entertainment — in countries across many geographies, including South Africa, Mozambique, Nigeria, Kenya, India, Philippines and Brazil. She contributes the monthly “Fair Exchange” column, concerning business relationships and partnerships in adland, to MarkLives.
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