Are You Lost in the Loyalty Wilderness?

Brand loyalty is currently in a delicate state. How many loyalty programmes do you belong to? And how many of those programmes are you actively involved in? While loyalty programme enrolment has been steadily increasing, member inactivity over time is also increasing, according to Barry Kirk, vice president of loyalty solutions for Maritz Motivation Solutions, who here explains how the challenge of capturing attention yet still losing engagement is leading to a decline in results for many loyalty programme operators.

To make matters worse, not only is the solution hard to find but - for many businesses - the underlying cause of the problem isn't even clear. Many marketers say they are still unsure about how to correct the problem.

So why are loyalty programmes under-delivering? Over the past 30-40 years, loyalty programmes have become an important table stake in many industries, they have not evolved significantly from the models that reached maturity in the 90's.

As a result, while today's customers are more than willing to give programmes a look, they often quickly lose interest before ever becoming truly engaged. Commonly expressed customer frustrations include:

• Programmes lack differentiation: "I can't tell one programme from another".
   
• Programmes are too complex: "The rules are too complicated to figure out or remember".
   
• Programmes aren't personal enough: "They don't treat me as a customer they know and care about".

Today's consumers want more than a transactional exchange. Just as the company wants to forge a relationship with the customer, the customer wants a relationship with the company. A personal touch, opportunities for engagement, and a sense of community are emerging as new loyalty strategies that can be added to a solid reward-based foundation. To deliver that requires a rethink of how customers make choices and a more nuanced understanding the nature of customer loyalty. Both of these concepts are explained in an e-book published by Maritz Motivation Solutions and The Maritz Institute, entitled 'The 4D Loyalty Framework'.

Think Differently About Behaviour
It is well understood how people are driven to satisfy their own self-interests, but what is less understood is that humans (and good corporations) are also driven to bond with others and to be part of something that makes the world a better place. The Maritz Institute draws from the work of Paul Lawrence and Nitin Nohria of the Harvard Business School to rethink what drives human behaviour. Their four-drive theory of human behaviour argues that nearly every individual on the planet is imbued with four biological drives:

1. Drive to acquire - compete for, control and retain "stuff", status and experiences;
    
2. Drive to defend - to protect our "stuff", turf, status, relationships and creations;

   (These first two drives are oriented toward transactional self-interest. But people are more than this. They are also biologically driven to pursue meaningful relationships and to learn, comprehend, and contribute to a better world with the next two drives.)
    

3. Drive to bond - form long-term, mutually caring relationships and to engage with others;
    
4. Drive to create - to learn, inquire beyond, imagine and invent a better world.

By satisfying all four drives, marketers can deepen relationships and influence choice, taking business beyond the basic transaction state and begin to forge a deeper, engaging relationship. Maritz Motivation Solutions and The Maritz Institute have developed a new map to tap into each drive, known as the 4D Loyalty Framework.

The 4D Loyalty Framework
The 4D Loyalty Framework aims to provide a full roadmap for the journey to longer-lasting customer relationships, and identifies four customer engagement dimensions:

1. Relational - a thoughtful, personal customer/business relationship;
    
2. Transactional - interaction based almost entirely on financial exchange;
    
3. Passive - customers reacting out of habit;
    
4. Active - customers being fully aware of their participation and making values-based choices.

The framework reveals that marketers have four choices in how they build connections with customers (Active, Passive, Transactional and Relational), which in turn reveals four types of loyalty that can effectively be engaged:

1. Inertia Loyalty (Passive + Transactional) - trapping customers into continual brand interaction;
    
2. Mercenary Loyalty (Active + Transactional) - rewarding customers for purchase behaviors;
    
3. True Loyalty (Passive + Relational) - focuses on the whole person and making the entire experience engaging;
    
4. Cult Loyalty (Active+ Relational ) - the brand becomes part of what defines the customer.

Maritz points out that successful programmes don't simply choose one system over another. Today's customers aren't just waiting to be rewarded for their repeat purchases, but they also aren't just looking for a brand relationship. The most successful strategy for a loyalty programme is to take a foundation of a good reward strategy and add to it new strategies focused on 4-drive engagement, a personal touch, and building community.

Marketers have the opportunity to integrate the best elements of Cult, True and Mercenary Loyalty together into a multi-loyalty approach. In doing this, a greater variation of participants will be drawn into the programme and ultimately a greater number will become and stay engaged in it.

"The 4D Loyalty Framework presents a new way of looking at the possibilities of loyalty marketing. By understanding the multiple paths, we will be able to build longer lasting customer relationships as well as larger fan bases," concluded Kirk. "By realising the importance of focusing and truly caring about customers' needs, becoming more creative with programme currencies and rewards, creating more personalised interactions and striving for a more complete and engaging human experience, we can redraw the map for loyalty marketing and begin to offer programmes that brand loyalists will find irresistible."

The complete 4D Loyalty Framework e-book has been made available for free download from the Maritz Motivation web site - click here (PDF document, no registration needed).