Category: Blog

Separating Friends From Fakes

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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Marketing Is Dead, Loyalty Isn’t

It has been said that marketing is dead.

Let us be perfectly clear: that is patently false. That very statement is, after all, just another form of marketing, a form of manipulation, the kind of provocative, over-the-top claim designed specifically to attract clicks and drive SEO traffic (which, by the way, has also been declared dead). It is certainly true that traditional marketing techniques — including advertising, public relations, branding and corporate communications — are experiencing a steep decline in efficacy. But that’s hardly news. People have been declaring print media dead for decades, with syndicated television and radio soon to follow. But even these mediums for advertising compose but a small part of what marketing entails. The bombastic claim that “marketing is dead” is, in itself, pure marketing.

It is a ploy.

In the world of marketing, ploys work – to a limited extent. Unfortunately, when it comes to consumers of the modern era, that limit was reached long ago. People simply aren’t paying attention anymore to ploys. Audiences have developed the ability to see through the doublespeak traditionally employed to garner their limited attention. They have evolved a resistance to traditional means of disruptive marketing.

Consider the current paradigm prevalent in the marketing sphere: companies expend enormous financial resources on advertising campaigns in an effort to inform consumer behavior. But why should consumers listen? In a low-trust world, traditional means of advertising simply do not, cannot stick. They lack credibility, and without credibility, they lack the power to inform consumer choice.

The problem here is trust.

The solution is people.

Trust In A Low-Trust World, Loyalty In A Disloyal World

Atul Gawande’s recent New Yorker article on the spread of ideas, Slow Ideas, explores the social mechanics behind what helps great ideas spread. One of his key findings suggests that simply creating a strong idea, a superior product, a slick presentation does little to speed actual adoption. Rather, the key facilitator of adoption is quite simply: other people. “Diffusion is essentially a social process through which people talking to people spread an innovation,” wrote the great scholar Everett Rogers.

Of course, mass media can introduce people to new ideas, new products, and new ways of living. But, as Rogers posited, people follow the lead of other people they know and trust when they make decisions. Gawande goes on to write, “Every change requires effort, and the decision to make that effort is a social process.” In other words, like any healthy social relationship, the relationship between a brand and a consumer must start from a datum of mutual trust.

People could care less about what marketers have to say. After all, marketers have interests that don’t necessarily align with theirs. Marketers can’t be trusted. But if someone they do trust, someone they know and care about recommends a product, they would be inclined to check it out. Furthermore, by making a recommendation, the recommender puts his reputations on the line. A Nielsen Global Online Consumer Survey found that 90% of consumers trusted the recommendation of friends.

As an individual within the consumer’s personal sphere of influence, a friend is credible in a way that no slick, well-executed marketing campaign could ever hope to be from the outside. They are the coveted and elusive brand advocates, the holy grails of brand loyalty sought by marketers (and the companies that pay them). Customers are good. Repeat customers are better. But what you really want are customers who not only come back time and time again for more, but encourage others to do the same. These are the customers who have bought in literally and figuratively, and they willingly share a brand with their friends and family. And, they do it for free.

Unfortunately, today’s consumers, particularly young consumers, are notoriously disloyal and prone to jumping ship in search of greener pastures and better value. Forum Corporation reports that up to 40 percent of the customers in its study who claimed to be satisfied switched suppliers without hesitation (Stum, D.,and Thirty, A. “Building Customer Loyalty.” Training And Development Journal, Apr. 1991, pg. 34.). Clearly there is a massive deficit in customer loyalty currently affecting the marketplace.

Building Fandom, Building Trust

In such a low-trust environment, how might a business go about establishing not only a customer base, but a base of repeat customers and, more importantly, brand advocates?

First, by engaging and empowering the customer base, and helping them navigate the Consumer Decision Journey along the way. If the key to successful dissemination of an idea is peer to peer communication, then the heart of marketing success is relational. More specifically, the relationship between brand and customer must be more than just transactional. Consumers don’t want to be just another target statistic, just another market segment. Heck, no one wants to be just another number in line, another cog in the grinding machinery of global capitalism. Countering this all too common narrative of grinding capitalism with one that consumers can actually believe in and get behind, is absolutely critical for success in any venture.

Take a look at the world’s most admired companies in recent times. Chances are, the old-school blue chip stock favorites, like GE or Ford, aren’t topping that list. Don’t get me wrong, GE and Ford are, and will remain, ridiculously profitable. But the real success stories are the ones that have emerged from the internet revolution, the true scions of our age, and more importantly, often have a fanatical fan following. It is no accident that tech companies are more trusted in general than any other market sector, and that the three businesses that top the list include Apple, Google, and Amazon are tech firms.

Companies such as Apple have built stunning success on delivering not just an excellent product, but also weaving a compelling narrative through unique design as well as through front line pioneering. Apple’s “geniuses” employed in their specially-designed stores across the world are no more than loyal, Apple advocates who are given the chance give sincere, trustworthy advice to other customers. After all, Apple isn’t just another tech company, it is the pursuit of product perfection.

Likewise, Amazon isn’t just “a website that sells stuff at a good price”. Rather, Amazon’s mission statement is simply to be Earth’s most customer centric company. More importantly, they follow through with hassle-free returns and an almost neurotic attention to customer trust-building measures such as personalized buying suggestions.

Google, approaches trust-building by first building staff loyalty. The tech giant, often named the best place in America to work, is legendary for the benefits they lavish on their employees. After all, happy, empowered employees are very much loyal advocates in and of themselves.

Other firms that topped the list include Southwest, known for their renowned friendliness, happy employees, and a mission statement that has nothing to do with airplanes, but everything to do with freedom.

These companies don’t simply enact customer loyalty programs and then sit and wait. Rather, these companies constantly innovate salient ways of keeping the customer engaged in every conceivable way, all in the pursuit of credibility. As their balance sheets can attest, that pursuit has paid off in spades.

Welcome to the new age. The old ways of marketing have died, and good riddance. With the passing of gimmicky marketing ploys, companies can get back to creating real value and giving customers real social capital. In fact, marketing is not really dead – it has been made more alive and potent than ever. With the rise of the internet, businesses both large and small are now being held accountable for the marketing content they produce and the messages contained there within. With so many customers ready to tune out or switch to the competition at the click of a button, that message had better be worth something. Loyalty, after all, must be earned.

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