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What’s Your Customer Loyalty Game?
In 2020, while many brands were sending out feel-good messages and trying to figure out what they should do next, Nike flexed its customer loyalty muscles and generated a record $3 billion of membership revenue in the 4th quarter. There’s no doubt that customer loyalty programs create and then capitalize on the power of referral marketing.
How’s your referral marketing working for you?
If your referral marketing consists of a tired points card, probably not much. Today’s consumers don’t want to collect points for sending email on to their friends and family (and then get hated on at Thanksgiving dinner for doing just that). Today’s consumer wants to be part of something. They want to feel like and perform like a member of the family, and if they get compensated, that’s gravy.
Seriously. That’s how loyalty works.
Nike uses a variety of apps to feed information to their biggest fans, information about what is going on at Nike.com, and how they can participate. The loyalty program is only peripherally about products. The Nike membership gives participants access to inspiration and community. Participants don’t win points for buying Nike products (that’s so 1990!). They get points for participation and for hitting personal milestones like birthdays.
It’s the participation that makes the loyalty program work. The more people that participate in the apps, the more likely they are to start having fun there. Nike loyalists form relationships that are centered around the app, and all the while, Nike is mining that information and keeping their logo and products front and center. Nike does make exclusive product offers only available to their members, which is also part of the award.
Starbucks plays the loyalty game very well too. In October 2020 they reported they had 19.3 million members, and that their loyalty program generates nearly 50% of their revenue. The Starbucks program tends to be very product-centric, integrating the rewards program with their easy online ordering system, but that makes sense for a highly consumable product. What Starbucks does that other companies fall short in is make the app interesting and relevant to its members' day-to-day lives. The Starbucks experience is also highly personalized to each member, which has contributed to unprecedented levels of pre-order/pre-pay activity. The Starbucks for Life and Bonus Star Bingo digital games allowed loyalty members to accumulate points and prizes - another way of keeping members on the app and engaged with the brand.
The right loyalty program for one company is never the right loyalty program for another - what makes a good program is inherently tied to brand. What we do know, though, is that loyalty programs work. If you haven’t reevaluated your loyalty program in some time, a good time to put that on your to-do list is yesterday.