Loyalty is not just a luxury for businesses. It’s an imperative.

Our work has shown that loyalty can become a powerful driver of profitable growth for years to come. The key is to recognize that there is a big difference between human loyalty and corporate loyalty programs.

In today’s hyper-competitive luxury markets, cultivating loyalty with a company’s best customers is the ambition of every CEO. And, when you consider the commercial benefit, it’s not a surprise: studies have shown boosting customer retention by 5% can increase profit by as much as 80%.

5%-80%
8.9%

02

Millennials

The consumer group already accounts for $200bn in spending, is quickly on track to outspend Boomers by 2017, and over-indexes with luxury purchases. But they are notoriously demanding of brands.

Millennials believe that brands today have to work harder to earn their loyalty than they did to earn the loyalty of their parents.

In a recent Fahrenheit 212 survey, 89% of Millennials stated that they are at least moderately loyal to luxury brands they purchase from repeatedly, and having a consistently great experience with the brand was more important than the quality of the product and the brand standing for something they believe in.

01

Loyalty Is Reciprocal

In a world defined by complexity, rapid change, and a plethora of new brands and services, affluent consumers crave the benefits that spring from a loyal relationship: the knowledge that someone cares, knows who they are, and has their back.

People appreciate that loyalty is based on a reciprocal relationship that builds over time. And as they go through the good times and bad, they know their commitment will be matched and a real bond will be forged. It’s a powerful force that crosses nationalities, gender, and age (including the notoriously fickle Millennials). In fact, our survey discovered that 64% of Millennials are loyal to brands, versus 25% who like to dabble with brands.

75%
In a recent survey conducted by Fahrenheit 212, 75% of respondents said that their relationship with a brand was important.
Marriott

In a mere 5 years, 50% of business travelers will be Millennials. For Marriott, the loyalty of Millennials is core to their future success. Read more about how Fahrenheit 212 helped Marriott develop an innovation platform that enabled them to embrace lean startup principles and intrapreneurialism to bring story, authenticity, and local culture to their global properties.

View Full Case Study

02

Points erode relationships

The premise of a loyalty program is to forge a stronger connection with customers. Yet, far too many “loyalty” programs are structured in a manner that deliver the exact opposite of the relationship consumers seek.

These programs dangle status, perks, and exciting experiences as the prize and then force consumers to make a solitary climb up the steep slope of earning respect— only to be knocked-back down if they waver in their dedication. The system communicates to customers that their worth is equal to the number of points they’ve accumulated. And if points drop from one year to the next, the program forgets any history completely.

Over time, the dichotomy between desire and payoff creates real friction. Not surprisingly, customers start to think about the program benefits in cold, calculating terms: extracting as much value as possible. When asked of the most attractive rewards option, survey respondents indicated that value-added rewards that enhance their experiences such as free shipping and returns were the most desirable.

To build a meaningful, long-term relationship, companies need to think longer-term. Ask yourself if points and the calendar year paradigm are the right measures of loyalty.

71%vs8%
71% of survey respondents would choose a loyalty program that provides ongoing value: free shipping and returns. In stark contrast, a paltry 8% said they would choose a points-based program.
Starwood

For Starwood Hotels & Resorts, their top 2% of travelers accounted for over 30% of their annual profits. Maintaining and growing their loyalty would have a major impact for their brand, customers, and business. Read more about how Fahrenheit 212 helped Starwood develop their innovative approach to loyalty using these principles.

View Full Case Study

03

Make it personal at every interaction

Fueled by mobile usage, customers expect seamless experiences across the multitude of touchpoints through which they interact with brands. This includes an expectation of individual recognition at any of these touchpoints, whether it’s in-person, online, on the phone, or through social media, people expect the brand to know who they are and respond appropriately. 80% of survey respondents stated that they are loyal to brands because they consistently have a great experience with them; this outranked the quality of the product and whether they felt the brand represented their beliefs.

In this multi-channel, instant-feedback environment, there are often breakdowns in communication between different groups within an organization. The result is a fragmented and frustrating experience for customers who remain anonymous to the business units throughout it. In the age of personalized services such as Uber and StitchFix, this is unacceptable. The customer doesn’t care how you are organized as long as you organize holistically around them.

In this world, companies like Warby Parker are reinventing all expectations. The connection between ordering your glasses, trying them on, and receiving them are seamless. In fact, try giving their customer service line a call and you’ll be pleasantly surprised that a person picks up the phone to answer your questions directly, not an interactive voice response.

4 out of 5
80% of respondents are loyal to brands that they consistently have a great experience with. This outranks quality of products at 69% and whether the brand represents their beliefs at 31%.
Mashreq

Leading Middle Eastern bank, Mashreq, was challenged to get customers signed up with several of their products. Customers had a tendency to diversify their investments with several banks, partially as a result of banks themselves creating divisional barriers. Read more about how Fahrenheit 212 helped Mashreq develop a bank-wide reward and loyalty platform that increased cross-selling 35%.

View Full Case Study

The key to success is to design the relationship around the fundamentals of human loyalty. Many brands with cult following, such as Apple and Nike, don’t have a loyalty program at all. Instead of logging a rewards number, they build human loyalty with their customers across their actions:

01

Respect

Design a relationship structure to incentivize a customer connection, not just transactions.

patagonia

Patagonia’s CEO has stated that they don’t want people to buy more than they need. They stand by their promise of the most durable products with an “Ironclad Guarantee:” they will repair or replace products that are damaged or unsatisfactory.

02

Recognize

Use technology to explore and understand what your customers really care about. The amount of data that we are able to collect about customers opens up a wealth of insights into their preferences, desires, and habits which enable companies to anticipate their needs better than ever before.

burberry

Burberry has woven technology so seamlessly into their consumer relationships that they can track, remember, and anticipate customer desires. In every Burberry store, associates have an iPad with all relevant customer information from their activities on Burberry.com as well as in-store.

03

Reciprocate

Build a two-way relationship. It’s not just about what your customer can do for you; how do you help improve your customer’s life?

uber

Uber’s mutual scoring system is a great example of the basis for a loyal relationship. Because drivers and customers are scored, both are motivated to invest in the relationship.

04

Reward

Provide frequent opportunities to build the relationship together.

sephora

At any Sephora, in-store or online, customers can get consultations, free samples, and tips, enhancing each trip beyond the purchase.

The changes are intuitive and simple, but the change they create is big. Companies that break with the belief that loyal behavior is a means to an end and design programs that embody the tenets of human loyalty can shift the paradigm from a transactional battle of value-extraction to a relationship that delivers real value for both sides.

Learn More

Can we help your approach to loyalty? Let us know, and we’ll be in touch shortly.