Over the last few years, advances in tracking software have helped brands deliver hyper-personalized recommendations to their customers.

But with growing concern about data protection, and the latest research confirming that values -- not products -- drive brand loyalty like never before, it may be time to rethink how you forge connections with your most important customers.

The trouble with building customer loyalty programs strictly to reward and encourage transactions is that transactions reveal little about why people buy or what they need from your brand to hand over their loyalty.

Free Download: How to Build Customer Loyalty

And, despite the wealth of data that customer success teams now collect (like transaction and user histories, Net Promoter Score®, loyalty program sign-ups, reward redemption), old-school loyalty schemes miss the mark when it comes to driving hyper-personal relationships between a customer and the brand.

Membership programs -- done right -- can build lasting customer bonds. Not only can they drive sustained, profitable customer loyalty, but they can also reveal a wealth of human-level, qualitative insights that go beyond the transaction.

For a stronger grasp on what we mean by membership, think back to groups you were a part of in your early years -- recreational sports teams, scout groups, perhaps your cabin at summer camp. These groups enabled deeply valued connections among their members. Notice that we didn’t say “connections with the host organization.” By enabling connections between its members, the organization gained your loyalty by affiliation.

With that reflection in mind, consider what your company asks of its customers. You probably ask for their loyalty (buy more, refer us more), or their advocacy (support what we believe in), but are you offering them loyalty in return?

Today’s most successful brands are empowering connections between customers and creating communities that build a personal relationship with their brand. To create those connections, you have to first know who your customers are, why they chose your brand, what the bigger purpose you both support is and how they’d like to contribute to that purpose. Not until you know them at this level can you provide a pathway to sustained loyalty.

In other words, your brand has to make the first move. But it doesn’t take a complete overhaul to shift the focus of your customer experience team from transaction-based loyalty to membership. Brands that have been successful have focused on creating a community of members -- a community centered on the core purpose and values the brand shares with its most important audiences. Here are a few ways you can enable their success:

How to Build Customer Relationships and Loyalty

1. Create an exclusive experience.

Microsoft, which is obsessed with user adoption, recognizes the importance of letting its customers define value. Its Windows Insider Program (WIP) is an open software testing platform that lets Microsoft’s biggest brand fans sign up for pre-release builds of the operating system. Members gain exclusive insider access -- thus, the name of the program -- previously available only to developers.

In exchange, these users deliver invaluable human-level insights that inform product design. The WIP slots members into value tracks based on the actions each member takes, like bug identification for product development or peer-based installation support for customer success teams. As members complete actions, their experience becomes more customized, and their commitment to Microsoft deepens.

2. Build identity by enabling customer interactions.

Patagonia has worn its mission on its shirtsleeve -- protecting wild places -- from its very beginning, and its customers and partners largely share that mission. The outdoor retailer introduced its first customer-driven membership experience with the launch of Patagonia Action Works, which connects skilled volunteers with local purpose-driven organizations focused on protecting wild places. By enabling interactions between these loyalists on its platform, Patagonia fosters deeper identity -- and more-sustained loyalty -- with the brand.

3. Deliver value members can’t get elsewhere.

The radically transparent clothing company Everlane gives its members early awareness of and access to limited-edition products. Everlane’s membership model enables the brand to gauge interest in specific apparel pieces by tracking requests for notifications, and uses interest levels to inform inventory strategy.

From the member’s perspective, this is a crystal-clear example of an experiential reward -- something a customer simply cannot get without membership. Member-only experiences like exclusive interaction opportunities with product designers and after-hours in-store events make membership that much more desirable.

4. Recognize the rock stars.

Once you’ve gathered a member community and reinforced the identity its members share, you’ll need to reward and elevate the people who add the most value to the group.

The Dyrt, often described as the Yelp of camping websites, rewards shared values and community esteem through its special-access Ranger Program. Reviewers must apply to join the community, and one of the key criteria for acceptance is validation by their peers in the community. This unique, peer-based recognition of its highest-value members creates momentum while also enabling the brand to shift into listening mode. So when customers (otherwise known as members) point out what they want next, the brand hears it first and responds with offers of new features, services or products.

What Not to Do

You might have noticed that none of these tactics relied on material rewards like discounts or freebies. Although material rewards are great hooks for a one-time trial, they don’t sustain engagement. In fact, promotional prices ultimately become a barrier to engagement and loyalty, because they train your customers to expect a discount, not a relationship with your brand.

Your customers want more than a transaction -- they want a long-term relationship and a connection to a purpose that’s bigger than any single business. By responding to this call, your brand has much to gain: invaluable human-level insights, sustained loyalty, and customers who are deeply connected to your brand.

Next, learn about the difference between customer loyalty metrics like Net Promoter Score and customer satisfaction.

Net Promoter, Net Promoter System, Net Promoter Score, NPS and the NPS-related emoticons are registered trademarks of Bain & Company, Inc., Fred Reichheld and Satmetrix Systems, Inc.

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Originally published May 1, 2018 8:00:00 AM, updated November 25 2019


Customer Loyalty