Consumers today are being courted by loyalty programs at every turn – from the airlines they fly to their financial institutions, favorite restaurants and the retailers they frequent. And as much as today’s consumer values – and expects – rewards, some loyalty programs remain more successful than others.
“Everyone is vying to own the consumer relationship today,” said Mike Knoop, president of financial institution loyalty for Augeo. “However, not every organization understands how to go about it.”
In fact, statistics published by Social Annex reveal that while 87 percent of shoppers say they want a loyalty program, 62 percent surveyed don’t think the brands they support do enough to recognize their loyalty.
“The challenge for credit unions is to deliver a platform and experience that increases the loyalty by innovating the rewards to the members,” said Knoop. “Remember that your members likely belong to dozens of loyalty programs and have become very savvy to understanding the value of your rewards program.”
So just what can credit unions learn from those that have mastered the art of loyalty?
The Airlines – Putting Their Best Customers First
According to Andrew Gates, CEO of Azigo, Inc., one thing the airlines do very well is segmenting their customers.
“The airlines have no qualms about showering their frequent flyers with more ‘miles’ and other perks than the occasional flyer,” he said. “And the airlines are also brilliant at adding enhancements that don’t cost them anything, such as an upgrade to first class or early boarding.”
Gates emphasizes that the same principles can be applied to a credit union’s loyalty strategy. “Consider setting up a separate phone line for ‘elite’ members,” he said. “Small, inexpensive gestures like that can make them feel just a little more special.”
Knoop notes that the airlines also do a great job of keeping their most loyal customers engaged over the long term. “Delta, for example, maintains several high-end SkyMiles Clubs in the Atlanta airport even though most of its customers simply have no other options for flights,” he said. “What this tells us is that Delta isn’t taking any chances with its customers, making sure they don’t even look at another carrier should an option become available.”
Amazon – A Holistic Approach to Brand Loyalty
According to Knoop, Amazon’s loyalty strategy is one every credit union should study as it goes beyond points and perks to consider the customer experience holistically.
“In addition to all the freebies and discounts that come with Prime – which, by the way, is not free to Prime subscribers – what credit unions can learn from Amazon is the importance of great organization, superior customer service, rapid delivery and digital seamlessness,” he said. “In short, Amazon makes it incredibly easy for us to get exactly what we want immediately, at a competitive price, without ever leaving the couch.”
While credit unions may not enjoy the expansive market reach and deep pockets of Amazon, they can take a page out of the mega-retailer’s playbook.
“You can give members the speed and convenience they value with ‘instant issue’ cards, for example,” said Knoop. “And, like Prime customers, develop a loyalty rewards program where your top-tier members can receive exclusive offers, such as premier checking accounts that wave fees for those that keep a certain balance or have direct deposit.”
Target and Starbucks – Retail Rock Stars
Among bricks-and-mortar retail rewards programs, Knoop points to Target’s REDcard as a great model to follow because of its solid utilization.
“The REDcard offers 5 percent back on Target purchases, driving customers directly into the Target brand for many products they might otherwise buy elsewhere,” he said. “Credit unions should find a way to reward their most loyal members by making it even more enticing to do business with them.”
In the highly competitive coffee market, Knoop notes that Starbucks’ Rewards program has “instant gratification” down to a science.
“Not only can Starbucks Rewards members accumulate and redeem ‘stars’ quickly and easily, but the program’s mobile app is easy, accessible and intuitive,” he said. “It can be unlocked on a smartphone effortlessly with biometrics and has an integrated mobile payment feature.”
Knoop added that Starbucks Rewards are all the more engaging because the program is fun. “Starbucks gamifies the experience by offering customers that go, say, three times a week with an extra free coffee if they stop by a fourth time,” he said. “Gamifying promotions can dramatically heighten awareness and participation, and that is the direction the industry is going.”
Republic Services – Turning One Man’s Trash into a Community Treasure
While the nation’s top brands may bring a wealth of experience and resources to their loyalty programs, Knoop reminds credit unions that innovation can come from surprising places.
“Take, for example, a company called Republic Services, which is in the waste disposal market as a direct competitor to Waste Management,” he said. “Republic wanted to encourage its customers to recycle more, but didn’t have the funds available to reward individual households in meaningful ways.”
Knoop adds that, in order to show appreciation to its most ‘sustainable’ customers, the company set up a municipality based competition, in which a total grant, say $60,000 was given to the community that recycled the most during the promotional period.
“Augeo gamified the loyalty program for Republic allows points to be tallied within communities, and then allowed the winning community to vote on a local service project to be funded by Republic, such as playground equipment or an upgrade to a local baseball field,” said Knoop. “Bringing philanthropy into the mix is a great way for credit unions to reward members, unite them through a common cause approach, and brand themselves as active members of the communities they serve.”
Azigo’s Andrew Gates added, “An effective loyalty strategy can take many shapes and forms, but all have one thing in common: a strong and lasting commitment up and down the organization. So make sure you are investing all the time and resources you need in order for your program to thrive. And, more importantly, develop a culture throughout your credit union that celebrates the member at every touchpoint.”
Launch your loyalty program into the big leagues with our How-To Guide: Applying the Tactics of the World’s Best Loyalty Programs.