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Three loyalty programs so good, they don’t look like loyalty programs

Picture if you will, a circle…

If you do it right:

A Pay-Per-Click lead, or a click-through an ad, or a search after a mention in a press release becomes a new customer.

If you do it right:

A new customer becomes a loyal customer.

If you do it right:

A loyal customer tells a couple of friends and gets you two more new customers.

See the circle?

Now let’s get a little more complex.

You do your math as a good marketer and determine your lifetime value of a customer. To understand that math, refer to this past blog post.

Lifetime value of a customer determines how much you should be willing to spend on a new customer. When calculating that “spend” consider how much you are willing to discount your product as part of that spend. Those discounts can create a Tipping Point for their first purchase.

If you do it right and get more loyal customers, your lifetime value of a customer goes up.

If you do it right, then you can spend more and get even more new customers, creating an even more awesome circle.

For those keeping track at home, there were five “If you do it right’s” in our circles. Today we are going to focus on the fourth one, this one: If you do it right, and get more loyal customers, your lifetime value of a customer goes up. Are you ready? Let’s roll.

A program around keeping and creating loyal customers should first include audits within your company to make sure everything is working as it should. Are your customer service people cavity-inducingly sweet? Are your products the highest quality? Is your newsletter strategy the-opposite-of-annoying? With everything shored up, and with a program in place to make sure it all stays that way, then you can focus on initiatives to turn more of your new customers into loyal customers.

I’m about to use a term that brings a lot of eye-rolling in the marketing world, and will probably get a lot of people to abandon this blog post before they get to the good stuff. So before I say it, let me start with—I promise you’ll look at it in a whole new light and there are new, inspiring angles here.

If you do it right, you’ll invest time and resources into an innovative, impossible to ignore, smile-inducing loyalty program. That’s right, I said it, a loyalty program.

The gorgeous sensuality of today’s great loyalty programs is that they are creative, and a little sneaky–they don’t involve a punch-card and they don’t mean you are giving discounts to customers who would have paid full price anyway. Often, a customer doesn’t even realize they are in a loyalty program.

Let’s look at three examples.

Amazon Prime

As a customer, you pay $79 a year to receive free 2-day shipping. Really? That works? And that’s a loyalty program?

Amazon doesn’t share specific stats involving the Prime program. However, Robbie Schwietzer, Vice President of Amazon Prime told Bloomberg Businessweek magazine, “In all my years here, I don’t remember anything that has been as successful at getting customers to shop in new product lines.”

•    In 2009, Amazon Prime had 2 million customers, in 2011, there were 5 million Prime customers.
•    Prime members spend 130 percent more than regular Amazon customers;
•    92 percent of Prime members surveyed by Piper Jaffray plan to renew their membership.

To add to the evidence that Prime is actually a loyalty program, Amazon offers free Prime membership to students for six months and then charges students half-price while they are still a student—yep, they are developing that loyalty early.

To help keep Prime customers happy, Amazon continues to add benefits. Just last month, they added dozens of programs to their free-stream library from The Discovery Channel and Fox.

The lessons to learn from how Amazon is managing Prime would be a list longer than Santa’s naughty list in Vegas on a Saturday night. Needless to say, it’s robust, sticky, ever-growing, and a little sneaky—it’s brilliant.

Loft Loves Teachers

There are certain groups of people who are especially receptive to the exclusive discount message:

  • College students
  • Military personnel
  • Teachers

Plus, the added bonus of offering a discount to those three groups is that even people who AREN’T in that group get the warm fuzzies about you. It’s a win, win, win.

Ann Taylor Loft created an entire program just around attracting and keeping teachers as customers.  They offer special discounts, exclusive sweepstakes, even grants, and events. They put thought into it, they create news that allows them to continue to communicate with teachers, they keep it fresh. All of these pieces equal a talked about, elegant, effective loyalty program.

Legal Zooms Business Resources Initiative

In some ways, this is my favorite of the loyalty programs. LegalZoom has a lot of small businesses as customers, so as an added benefit they have gathered dozens of other companies who sell products to small businesses. Some of their partners include:

  • Volusion
  • Iolo
  • PrintRunner
  • The CopierSupplyStore.

As a LegalZoom customer, you often get special deals through their partners as well. This is another one of those sneaky loyalty programs. Why would you purchase legal documents from a similar service when you get dozens of benefits from LegalZoom? Not to mention just the fact that they have recommended partners. So when you are ready to add SEO services or have someone write your business plan for you, you just might check back with LegalZoom’s resources first. Isn’t that exactly the kind of behavior that the old, tired punch-card was trying to get you to do? Love it.

Are you convinced now that loyalty programs can be new, sexy, and a fistful of awesome? Get your most creative team members together, fuel the meeting with maple bars and French roast and come up with your own 2012 version of a Loyalty Program. Then check off that #4 “If you do it right.”

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