Consumers today are wise to brands’ cheap tricks. Millennials in particular are highly sensitive to game mechanics — they grew up in the age of email fatigue and brand agnosticism — and aren’t so easily taken in by a mere drip campaign. Retention and loyalty tactics such as points programs, re-engagement email campaigns, and even deep-linked push notifications can easily get lost in the deluge of content that customers are inundated with on a daily basis.

In fact, these tactics aren’t making consumers more loyal. Despite the ubiquity of referral programs, VIP programs, and other retention tactics, only 13% of all customers are loyalists, and only 6.5% of millennials consider themselves brand loyal. This means that while customers may be reaping the benefits of your points program, as soon as a better deal comes around, they’ll jump ship. This isn’t loyalty — it’s just bargain hunting!

While incentivization programs can be effective, success stories like Sephora and Starbucks have spawned a new generation of brands that use these programs to put lipstick on a pig. This short-term approach might boost your retention numbers for the month, but it’s not sustainable in the long-term.

In order for loyalty programs to be truly effective, they need to be built on a foundation of a good product and a good buyer experience.

Go Beyond the Bargain Bin — How Companies Inspire True Loyalty

There are three layers to any company that has truly loyal customers. In order of importance they are:

  1. Have a great product
  2. Provide a positive experience
  3. Incentivize

The first layer is simple: have a great product. No amount of marketing or customer service will make up for a subpar product. The second layer is slightly more complex: at scale, even a great product cannot stand on its own — it needs superior customer service, good branding, press, engaging content, active social media accounts, and everything else that comes with marketing and customer service. These two layers are the meat of any successful consumer-facing company.

Incentivization is the icing on the cake. It’s the last thing you do once you’ve perfected the first two steps. Remember, Sephora has been around since 1970, well before its Beauty Insider program launched (2007). It had over 30 years of building a great product and great experience before its loyalty program ever existed. While it has certainly been successful, loyalty programs are not the holy grail of B2C success — the program was just the icing on an already delicious cake.

Go Back To The Basics and Deliver a Great Customer Experience

At its core, delivering a great customer experience consists of two things:

  1. Preventing negative experiences (such as interface problems, barriers to payment, or shipping delays)
  2. Fixing negative experiences when they inevitably occur

In other words, the customer experience is comprised of product/product marketing, and customer service.

Most companies invest a disproportionate amount of money into the first part of this equation. Customer service usually develops as an afterthought, a reaction to scale. The more people who are satisfied with step 1, the more your company grows, and the more instances of step 2 occur. Because of this, customers are often disappointed by the level of care they receive — it is out of sync with the caliber of experience they receive in other areas of the brand.

A recent Helpshift survey found that 94% of consumers “dread” contacting customer service. When asked what they most disliked about the experience, most people cited “difficult to understand accents from offshore call centers,” while the second biggest complaint was “long wait and hold times”.

Before you invest in luring customers back in with points and push notifications, address these two pervasive problems. Give your customers support experiences that are fast, effective, and efficient. Treat your customer service with the same care that you expend on your site, your mobile app, and your social media. This means being fast and on-brand — not sending your customers to overworked and understaffed call centers.

Don’t Put Lipstick on a Pig

Customer care is an integral part of offering a superior customer experience — it’s time for brands to treat it as such. Indeed, poor customer service isn’t just a bad look; it can directly impact your brand’s bottom line — 78 percent of consumers have bailed on making an intended purchase because of a poor service experience.

At the end of the day, if your customer has to wait on hold for an hour, they’re going to remember that more than a 1 point for $1 promotion. If you’re not doing the basics right, a loyalty program won’t help.

Published April 17, 2018
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