Are corporate “loyalty” programs really effective? A recent Direct magazine article suggests the answer is “sortof. And no.”

Does engagement marketing offer any hope?

Loyalty Marketing: Still Growing — But Growing Ineffective?

Designed to drive customer retention, loyalty programs offer a premium (frequent flyer points, rewards points, etc) to keep customers connected and “loyal.” Of course, incentive-based loyalty programs suffer an obvious flaw; your competitors can simply offer the same incentives, and you’re left trying to differentiate yourself.

The problem? Nobody’s truly connecting with anybody; most loyalty programs are little more than marketing payola — a kickback to customers for choosing one vendor over another. The result?

This From Richard Levey at Direct Magazine :

Americans now hold 1.3 billion loyalty program memberships, up from 973 million in 2000. And with 109.9 million households in the United States, that equates to around a dozen each.

So all is well in the loyalty arena, right?

Wrong. Regardless of how many they belong to, each household is active in fewer than five programs, according to a census by retention services firm Colloquy. And that marks a drop from 2000.

It appears the loyalty of “loyalty” programs is falling. So how do you maximize your loyalty program? How do you make it “sticky” — so customers keep coming back? And how do you bind a customer to the brand?

Give Them Rewards — AND Engaging Content

Engaging with customers via their values and passions creates a bond far stronger than 5,000 bonus miles, but combining the two strategies is the marketing equivalent of superglue.

The good news is that engaging with the participants in your loyalty program doesn’t involve digging them out of the general populace; they’ve already identified themselves.

How Do You Engage?

Engagement occurs primarily via two-way media channels, and anyone willing to make the sizable investment in a loyalty program should consider taking it one step farther.

Imagine an airline loyalty program might (blog, social network, etc) featuring the potential uses of loyalty points — and inviting members to share the “rewards” they enjoyed thanks to their points.

Populate it with engaging content, and suddenly, loyalty program members form a community (adding value to the loyalty program), sharing experiences. Did a loyalty member enjoy a vacation because they redeemed their points? Did another visit a long-unseen family member?

The beauty of social media is that your participants add their stories (and credibility) to your own, enhancing your brand and creating a bond that’s pure marketing superglue.

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