Corporate Loyalty Programs Need to Change to Membership Programs - Develop "Indispensability"

As reported by the 4/29/2010 issue of Colloquy:

"According to an article in Marketing Magazine UK, despite 86% of the population using retail loyalty cards on a regular basis, 50% of shoppers do not think it is worthwhile collecting points, according to a new survey conducted by YouGov SixthSense.

The report also found that 93% of consumers would continue to shop somewhere, even if the retailer scrapped its loyalty program. Only 17% of respondents choose where to shop based on their participation in loyalty card programs.

The top loyalty programs, in terms of usage, show that consumers participated in more that one program, with Tesco Clubcard being used by 66% of those surveyed, Nectar by 55%, and the Boots Advantage Card by 48%.

"Loyalty programs need to do more to create customer loyalty. The programs are best suited to retailers that are used frequently or where loyalty cards can be used in multiple stores, so that points and rewards accumulate at a fast enough rate to keep people interested", stated James McCoy, research director for YouGov SixthSense.

The online survey was carried out between February 18 and 20, and 1,469 British adults took part."

Corporations can learn a lesson from Membership Organizations by stepping up their "loyalty programs," by working to become indispensable to their customers.

Associations work to not only service their 'customer's' current needs, but to anticipate them. There in lies the difference - loyalty programs reward for the present whereas membership programs provide for the present on a more individual level as well as anticipates the future needs of their "customers." We discuss a 'customer life cycle' where we develop products and services for our members at different stages of their career or membership cycle.

If corporations want real loyalty, they need to not only be a friend today by providing benefits now, but be a friend tomorrow and anticipate their customer needs move over the time of their customer lifecycle.

"The My Starbucks reward program has been an overwhelming success"

Membership has long been a viable marketing and revenue channel for corporations looking to tap into people's need to be part of something bigger - I call it the "joiner gene." In the Starbucks Corporation F2Q10 (Qtr End 03/28/10) Earnings Call Transcript as cited by SeekingAlpha.com, Howard Schultz, Chairman of the Board, President & Chief Executive Officer of Starbucks had this to say about the My Starbucks reward program:

"...My Starbucks reward program has been an overwhelming success, driving unprecedented levels of customer engagement and loyalty as noted by both store visit frequency and cash loaded.

In fact, the rewards program is cited by core customers as the number one reason for increased visits versus six months ago. Since relaunching the program in December, registered card users have shown a significant increase in frequency with continued steady ticket performance. Card reloads were up nearly 45% this quarter versus Q2 ’09 driven largely by reloads on the new gold level card and since the program launched in December we’ve added over one million new accounts.

In addition, more than 200,000 customers have earned their way to gold level by visiting Starbucks 30 times in just eight weeks illustrating the tremendous traffic driving power of the card and the ongoing loyalty of our customers. Early this month we expanded our Starbucks card mobile payment, a test to 1,000 of our licensed locations in Target stores nationwide allowing card members to load their cards and pay for their Starbucks purchases using their iPhones. Stay tuned for further announcements of important consumer facing initiatives that will enable us to leverage mobile payment and other technologies that are ready made for the Starbucks brand in the months ahead."

Here is the link to read the entire transcript: Starbucks Corporation F2Q10 (Qtr End 03/28/10) Earnings Call Transcript -- Seeking Alpha

The success of this initiative is obviously based upon:
- a well thought out strategy
- a strong communication plan
- a very strong brand
- strong messaging
- and most important, buy in by all levels to the successful execution
of the program

I bring out the last point only because in many instances, this is where we fall apart. We forget that every time a member contacts us, we need to stay on message and deliver it in a way that our members will want to stay with us. I know that you know this...and I am very aware of how difficult it is to keep your team motivated and your superiors interested. But if you can do this, then your renewal rates will increase and your product sales will increase...and ultimately your job will get easier.

Now, is this a straight ahead "membership?" Well, people are 'joining' (albeit for free) a program where they are expecting specfic benefits. So, in my book, this looks a lot like a membership.