The difference between Membership and Loyalty

I often speak with corporate marketers about developing programs that increase the level of engagement between their customers and their business. Usually they end up saying something like "...we already have a loyalty program."

Well, a loyalty program is very different than a membership program.

Wikipedia defines a Loyalty Program as "...structured marketing efforts that reward, and therefore encourage, loyal buying behavior — behavior which is potentially of benefit to the firm."^[

The focus of the relationship is one dimensional being only based upon 'buying' or simply transactions.

Membership is a whole 'nuther kettle of fish.

With membership, the customer also buys into the "mission" of the organization and is aptly '"rewarded" for this both by the organization as well as by his/her own good feelings of accomplishment. Membership uses the individuals need to be part of something bigger, to leave a legacy, to develop a loyalty that far surpasses anything a simple "loyalty program" can achieve.

This is what corporations should be aspiring to. Jimmy Buffet, KISS, Apple, the list goes on. These corporate brands have taken loyalty to the level of membership. Their customers 'identify' with them and THAT drives sales. The sales are indicative of the loyalty - but not the whole shabang.

"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.