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The secret of brand commitment is not a loyalty program

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If you ask many business leaders, they will tell you that nothing is more important than loyalty. A loyal customer will come back to you time and time again because you deliver on a brand promise and give people what they want.

Of course, sometimes this virtuous circle needs a little fat – that’s why the loyalty program (which offers a “reward” for loyal patronage) was invented. It is a transaction concept that dates back to ancient Egypt, where pharaohs rewarded conscript workers and enslaved people with “tokens” for their work and temple time. In the age of Big Data, consumer rewards (free “stuff” or access) often come in exchange for personal data.

But consumers are less and less enthusiastic about this trade-off. They reject the idea that brand loyalty means giving up control over their data. Digital native Gen Zs in particular demand transparency and honesty from brands above all else, even though they also expect personalization.

Just look at the smashing ads that Apple has been broadcast on TV — seeing a young woman walking into the middle of an auction where her personal information (email guts, drugstore purchases) is about to be sold to the highest bidder. She pulls out her iPhone and with the push of a button she toggles the privacy setting to (poof!) make the auction disappear.

In 2022, control over data — and transparency about how it’s handled — is a concept that sells. And more than ever, customers want a voice in the brand relationship – and know that their voice is being heard.

Related: Create authentic relationships and build customer trust?

Go beyond loyalty and build devotees

The Apple ad is rooted in a reality the brand has recognized for years: the most important thing in the customer relationship is not loyalty, but enthusiasm. If customers really love you — and don’t just tolerate you for the sake of a few points, credits, or tokens — they’ll pay that extra $200 or $300, mainly if they feel they (and their data) are treated with respect.

These consumers as described in a study by Forrester as “devotees”:

  1. Spend more money on their favorite brands.
  2. Keep their business with these brands.
  3. Forgive them if they screw up.
  4. Pay a premium price for their products/services.
  5. Go out of their way to work with them.

This differs in important ways from a “loyal” customer, described as one who sticks with a brand for the benefits – until something better comes along. And in this age of customers burned by rising prices and shortcomings in service – there is less willingness to “pay a premium” for a product or to “forgive” brands when they screw up.

We are starting to see this shakeout happening in the streaming world. According to a recent Wall Street Journal report, 19% of premium service subscribers (including Netflix, Hulu, AppleTV+, HBO Max, and Disney+) “cancelled three or more subscriptions in the two years to June (2022)…an increase of 6% in the two-year period.” ended in June 2020.” Despite all the data streamers collect — and the many algorithm-based shows they produce — they’ve failed to build a committed customer base. According to the above study, 100% of “dedicated” customers are willing to pay a premium price for the brands they love, but only 11% of non-committed customers are willing to do the same.

Related: Creative Ways to Make Your Customers Happy and Loyal to Your Brand

Wrap your arms around your best customers

To achieve this level of commitment, you need to move beyond traditional concepts of loyalty and stop treating customers as mere data points. As Ana Andjelic wrote in Harvard Business Review in 2021“Loyalty programs — which effectively bribe people to buy more of your products — are lazy. In the modern ambition economy, people only develop real brand affinity if it gives them a sense of community.”

So how do you give consumers that sense of community? For luxury products, Andjelic explains, it can take the form of exclusive experiences, such as an invitation to the Château de Saran — an estate belonging to the powerhouse brand Moët & Chandon where you can’t pay to stay, but must be invited.

You can also build that sense of community in the virtual world — for a lot less money — by convening a select panel of brand enthusiasts, who are consulted on everything from new offerings to custom branded services.

For example, leveraging mobile-based research platforms allows brands to regularly “check in” with customers and gauge their needs. They can make their best customers feel part of their vital marketing processes and gain insights that help craft new brand messages or deliver new products or services.

Whether it’s a brand ambassador program, an online community for insights, or an exclusive chateau in the French countryside, people want to be active participants with their favorite brands. They will eagerly reach out to provide feedback, both good and bad. So find ongoing ways to connect with them – and show them that their voices are heard and lead to action in the company.

Brands still need data to serve customers effectively. But in this age of increasing government regulation With data usage — and growing consumer concerns about privacy — brands need to be transparent about what they collect and give consumers good reasons to let them into their private lives. The era of “creeping” consumers – and calling it loyalty – is over.

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