Marketing – Engagement vs Loyalty

I just watched a brilliant video satirizing the current state of advertiser/consumer relationships. It was produced by Geert Desager, the Trade Marketing Manager South East Asia for Microsoft Digital Advertising Solutions. Openhere is his agency. The video speaks for itself, but watch it and then I’ll share a few of my own thoughts about engagement and loyalty marketing programs.

The obvious point of this video is clear: marketing is typically a one-way street. We tell you what we want you to think about our product; but, we just don’t listen to your needs or perceptions and respond accordingly. Here’s where loyalty and engagement marketing can fill-in the gaps left by awareness marketing (advertising).

I’ve been a major proponent of loyalty marketing for the past ten years. These programs are designed to drive customer retention by offering premiums to keep customers loyal; i.e., frequent flier miles, Marlboro points, whatever. The two major flaws of incentive-based loyalty programs are the number of programs available for consumers and differentiating your program from those of direct (or even indirect) competitors.

Richard Levy of Direct Magazine reports:

  • Americans now hold 1.3-billion loyalty program memberships, up from 973-million in 2000.
  • The average household may register to around 12 programs each.
  • However, each household is active in fewer than five programs (Colloquy research). That’s actually less participation than in 2000.

It would appear the value of loyalty programs has declined. I disagree, as I will explain shortly. However, that said, engaging customers will create a much stronger bond than a thousand loyalty points. The good news is you already have a base for engagement with your loyalty database.

Engagement with customers is a dialogue. And, if you’ve invested in loyalty marketing, this is a natural evolution – and compliment – to your strategy.

If we use the example of airline frequent flier programs, imagine their loyalty program featuring potential use of accumulated miles through blogs or social networks. Members can share their rewards experiences with other members. Finally, provide engaging content, and your loyalty program instantly becomes an interactive community. Your participants validate your content resulting in an enhanced brand and even more loyal customers.

Principles of Engagement:

  • Don’t force one-way messaging. Engagement is about connection and conversation.
  • Connect on the same level of passion and values as your target audience.
  • Be authentic. Don’t pretend to be something you’re not, or make up stories.
  • All buying decisions are emotional. Engage your target on their terms, not on your product terms.

Most importantly, remember that brand loyalty is best established with two-way engagement. You’re not engaging someone if they don’t believe you’re listening. For example, if a blog is part of your marketing strategy, be sure you allow project time for replies to comments or to respond to emails. If you’re building a social network, you must provide information and unique content regularly.

In today’s overload age, it’s easy to get lost in the clutter. I recently spent a week on vacation completely away from email and voicemail. When I returned, I found nearly 3-thousand emails and 200 voicemails. I declared “messaging bankruptcy” and had our IT Manager completely wipe my voicemail inbox. And, if I didn’t recognize the sender of an email, it immediately went to a “Maybe Later” file (which I still have not emptied).

Engagement & Loyalty marketing is not about cutting through the clutter. It’s about creating an affinity for your brand based on your customer’s values and passions. Engaged customers will not delete your emails, they will seek them out!

As I said earlier, do not think I’m advocating engagement marketing over loyalty marketing. The two work best in conjunction with one another. Loyalty Marketing is still very important to long-term business success.

Active consumers become addicted to the best run loyalty programs. Studies confirm consumers are more loyal to businesses that give something back. They’ll visit more, spend more, and spread positive word-of-mouth. Did you know:

  • You can get a 500% return marketing to existing customers vs new customers.
  • It costs 7-10x more to attract new customers than to keep an existing customer.
  • A loyal customer is worth 10x the value of a one-time consumer.
  • Loyal customers are twice as likely to refer new customers.
  • Loyal customers insulate your business from competitors.

In future blogs, I plan to address some of the fundamentals of effective loyalty marketing:

  • Building a strategy
  • Positioning your program
  • Pros & Cons of premium offers
  • Customer recognition
  • Customer penetration
  • Value propositions
  • Experiential Awards
  • Measurement
  • Language to use promoting your program
Advertisements

7 Responses to “Marketing – Engagement vs Loyalty”

  1. Great thoughts. Would love to participate as you discuss some of the other aspects of loyalty marketing.

    Love the movie.

    C

  2. Great video, but, I think the premise is flawed. Advertising is always outbound. It is not a conversation between the product and the consumer. I do think it glaringly points out that we as radio brands need new, creative ways to cut through all the clutter out there in getting our product top of mind with our users. There’s a funny aspersion against radio when the girl in the video says, “Stop yelling, you sound like a radio commercial”. We certainly have yelled at our listeners over the years, and continue to do so quite often. This would be an excellent topic for our next conference call. I’d love to brainstorm ideas that might give us new paradigms of how we market ourselves on the air, on-line, and off-air.
    Dusty Hayes
    Program Director
    105.3 The Buzz

  3. Thanks Scott. Good thought starter. I think that the spoken word is so powerful. We just have to get around the blah blah blah factor as jocks!

    Barry

  4. Dude,
    I totally love this!
    -Mikey

    Mike Nelson
    Program Director
    99.1 WMYX “The Mix”
    Entercom Milwaukee

  5. One of the stations had a massively cool bit this past Fall. Great visual. Live on the website for a week. But to watch it, you had to sign up for their social networking club. As my 16 year-olf niece said “F that, I don’t want more spam”. (Heavy dripping teen sarcasm is implied.)

    One of the challenges is that people just don’t care that much about radio anymore. We’ve dumbed it down and surgically removed the creativity and theater and fun to the point that we’re just iPods with commercials. And at most stations the carrots that are dangled through the programs just aren’t worth the time and labor to earn them.

    I’m a Points Geek. Super Mega Elite American Status. No real work or effort required except do what I do and get rewarded for it. And we’re all going to China for the Olympics. But even that carrot would b questionable if they made me go through some of the hoops that we do with out listeners.

    With a certain company pulling the goalie so-to-speak and effectively removing their stations from the streets and community, I questioned this judgement with one of their VP’s. The database marketing should be a wedge in the pie. Not the pie. I told him that if I called Obama and suggested that he pull his volunteers and stop making appearances and just sit in an office and send emails to people, he’d fall off his chair laughing.

    Loyalty is hard-earned. You get it one listener at a time. And you do it the personal way.

    BTW: we’re about to launch a station somewhere and the owner wanted to do a VIP Club. I booted up my laptop and quickly pointed out that four other stations in town had VIP Clubs. And, as one of the interns at the brainstorming session was quick to point out, “Costco has a VIP Club”. “VIP” doesn’t mean anything anymore. We’re going with A List. There’s an image of exclusivity and eliteness to it.

    Sorry to run long. Up all night with a sick dog. (Not a euphemism)(Yet)

  6. Good stuff, Scott. I’ve heard it more today as “permission marketing” rather than loyalty marketing, but the premise is the same. Get a two-way interactive relationship between the advertiser/brand…and the consumer/customer.

    The more engagement, the more loyalty.

    Read Godin’s “Permission Marketing” if you haven’t already.

Trackbacks/Pingbacks

  1. Paige comments « Strategic Media & Marketing - It Ain’t Brain Surgery - Scott Sands - February 13, 2008

    […] 2008 by Scott Sands Radio Marketing & Promotional guru Paige Nienaber of CPR responded to my earlier post about Engagement & Loyalty marketing.  Since he’s usually right on the money when it comes to his radio insight, I thought […]

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