As customers we all know the difference between a financial transaction and a shopping experience. Even though retailers understand this, the vast majority of today’s customer loyalty programs involve earning points through purchases in what can best be called transactional rewards. From a member perspective, they are undifferentiated and become just a kaleidoscope of plastic cards which offer similar savings or other rewards.
These programs persist because they are simple and generally effective for driving revenue. But there’s a problem: the highly transactional, commodity-driven behavior this breeds in loyalty program members. Without the reward, customers will quickly go elsewhere, making the program only as strong as the investment the brand continues to pour into it. There’s nothing self-sustaining about it.
If we want customers to be genuinely connected with our brand, we need to move them beyond a point where they are “coin operated,” and instead to a place where they feel invested in the brand and its success. Invested customers are champions, spreading the word “for free” as advocates and having a far higher lifetime value for a brand (learn more in this webinar on the new customer loyalty management).
If transactional behavior isn’t enough of a challenge, the rapid adoption of consumer mobile and social media leaves brands with the need for new ways to reach loyalty program members at the right place and time. Getting to a place where the consumer’s context is known and actionable means having the technical infrastructure to sense and respond to dynamic situations.
The North Face gets it
It’s unreasonable to expect less than real engagement, so what is your company doing to move beyond transactional loyalty? Brands are starting to discover ways to engage deeper than the transaction and to create loyalty that isn’t based on constant incentives. Take The North Face for example, where their VIPeak Rewards program offers PeakPoints for participating in local sports events. By rewarding participation in a healthy lifestyle, The North Face has a symbiotic relationship with their customers, which goes far beyond purchase tallying.
The same opportunity is available to any brand that makes the decision to go beyond transactional programs. Without it, you’re more than likely reinforcing the wrong behavior in your customers and not getting the loyalty you desire.
This article first appeared on the Loyalty Lab Blog and has been lighted edited.