Building friendships and relationships, whether between individuals or between a customer base and a brand, requires trust. Building a relationship through effective loyalty marketing is key in identifying and really getting to know your best customers

There Are Facebook Friends, and Then There Are Real Friends

Expansive social media platforms, such as Facebook, can often feel completely shallow and utterly meaningless. Social media metrics such as your friend count, wall-to-wall interactions, and event invitations do very little to actually tell you anything about other users, or even yourself, beyond a rudimentary kind of public scorekeeping.

[sws_blockquote_endquote align=”left” cite=”Michael LeBoeuf” quotestyle=”style01″]It’s not enough to reward your customers with good service. You have to make them aware of the good deal that they’re getting for doing business with you — and keep reminding them of that in many subtle, different ways. [/sws_blockquote_endquote] After all, what really is the difference between having 10 friends, 100 friends, or even thousands online that you never talk to? The number of social interactions happening through social media certainly doesn’t indicate the quality of a relationship or gauge the depth of social engagement.

Don’t get me wrong, the invention of social media platforms has revolutionized the ways we communicate, interact, connect, and eventually spread ideas and culture across time and space. Yet, the act of getting to know someone on a personal level, of becoming friends so to speak, hasn’t changed for millennia. To really get to know people, it takes quite a bit more effort, time investment, as well as the occasional dose of risk – things social media platforms in their current incarnations have allowed and encouraged users to opt out of entirely.

Making friends and close connections requires authentic care and attention, and more importantly, trust. Cultivating customers who are not only repeat visitors, but also fervent advocates of you and your business, requires the same kind of love and care. In the customer loyalty marketing space punch cards just don’t cut it anymore. vPromos CEO, Jeff Mankoff, posits that the biggest problem with consumer loyalty programs today… [may simply be the fact] that consumers don’t want to carry around another punch card. Generic loyalty tactics don’t build brands. In fact, punch cards, and other bland rewards programs, are so ubiquitous that customers actually feel burdened, even punished, by the sheer number. The whole point of implementing a rewards program is to differentiate your brand, and reward your customers – foisting another generic punch card ploy onto patrons may not be the best way to do so.

Starbucks: A Case Study of the Gold Card

The Starbucks corporation, which first opened its doors in 1971 as a small cafe in Seattle, is now a 13 billion dollar operation that is regularly ranked one of the most admired companies in the United States. Its success in commoditizing traditional cafe culture for the mass market made it a global brand, and has been widely copied and adapted by food service competitors. Starbucks may have popularized standardized cafe culture in the United States, but intense brand loyalty is what keeps the company well ahead of the pack.

One way Starbucks builds brand loyalty is through rewards initiatives which, on the face, operate with similar mechanics as other popular reward programs. The more you buy, the more you are rewarded. However, beyond this simplistic mechanism for increasing sales lies a deeper intent to build customer relationships.

For example, the “Gold Level”, the highest level of the company’s multi-tiered reward scheme (My Starbucks Rewards program), has an added layer of social prestige and targeted personalization built in. Attainment of gold status comes with a slick and shiny gold card with the individual’s name and the date of their ascendance imprinted on the card. And it works. It works because as a rewards program, it does more than reward loyal customers with more physical goods or financial savings, it rewards with social currency and prestige.

It is added value that isn’t tied to finances. For example, while a friend will lend you money from time to time, and you may do the same for them, your friendship isn’t based on money. Rather, you give and take advice, feedback, favors, social cues, relevancy, and occasionally, criticism. In the same way, Starbucks isn’t giving you an occasional free coffee because you’ve earned it; they are giving you a free coffee, as well as personalized service and other fixings, because they consider you a preferred customer, a friend of the company.

Michael LeBoeuf, author of How to Win Customers & Keep Them for Life, argues that, “It’s not enough to reward your customers with good service. You have to make them aware of the good deal that they’re getting for doing business with you — and keep reminding them of that in many subtle, different ways.”

What do friends do? They celebrate your birthday. What does Starbucks do? The coffee chain will give My Rewards members a free drink on their birthday, reminding you of how awesome Starbucks is. In fact, the manner in which Starbucks implemented their rewards program earned it the 5th spot on The Street’s list of best rewards programs.

Of course, even Starbucks makes mistakes from time to time. Every business has to deal with customers whose consumption habits have become less than loyal. Unfortunately, Starbucks has chosen to do so by handing out demotions, effectively punishing former star customers who do not made an adequate number of purchases in a given year. Most people don’t much like being punished, particularly for something as trivial as buying a certain number of cups of coffee in a given timeframe.

There are other, better ways to encourage formerly prolific customers to return to the fold without resorting to sticks. To start, preferred customers could be warned of an impending status change, then it could also be made easy for them to get back on the train once their status has been revoked. The key word here is “easy”.

By its very definition, rewards programs are often perceived by customers as a series of hoops that must be traversed to attain a certain privileged status or unique boon. Having already jumped through those requisite hoops, most people don’t want to do it again. In fact, many individuals will readily switch to an alternative if only to avoid redoing anything. Remember, 20 percent of a business’s customer base (your best customers) will often contribute 80 percent or more of its income. Don’t punish that 20 percent.

Building Loyalty By Building Trust

There are many strategies for establishing relationships with new customers and building trust with existing ones, including outstanding customer service, superior products and experiences, and value through customer loyalty initiatives. The former two are no-brainers that all good businesses single-mindedly pursue to the highest degree. But the third, customer loyalty and retention, is what separates a good business from truly successful industry leaders like Apple, Toyota, or Starbucks.

In a sense, customer loyalty programs are a trust-building exercise. Unlike the use of coupons and other forms of immediate price promotion, reward programs are all about delayed gratification and working towards a shared goal. The consumer trusts that his patronage now will be rewarded later, almost as a form of investment. In return, the company keeps their end of the bargain by giving added value, in both hard and social currency, once the agreed upon goal is met. In other words, building trust in the context of a brand relationship, much like in a peer to peer relationship, is a process that occurs over time.

While many business owners and other niche firms don’t compare to these mighty corporations in terms of scale, reach, or cultural leverage, there are very few lessons learned that cannot be applied to businesses of all shapes and sizes.

How do you feel about the effectiveness of punch cards? What are some creative ways your business cultivates a sense of loyalty and emotional attachment to your place of business or product?

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