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Four Factors that Create Compelling Loyalty

$html.esc($author.firstName) Dennis By Steven Dennis on November 24, 2014

While we have seen a significant expansion of loyalty and rewards initiatives in recent years, the core elements remain pretty basic. This has to change, writes luxury retail expert Steven Dennis, who provides four key elements to making loyalty personal and compelling.


The world of loyalty is always changing, but for many brands meaningful change may not be happening quickly enough.

While we have seen a significant expansion of loyalty and rewards initiatives in recent years, the core elements remain pretty basic. Members accumulate points (or miles) for activities and/or spending and these points are redeemable for free stuff. There are typically occasional promotional opportunities to earn “bonus” points. Often participants receive special privileges, access or information. Status levels are fixtures of many schemes.

In addition, many loyalty programs employ some level of data-driven marketing designed to deliver more personalized offers. With few exceptions, these efforts are relatively straightforward as well. This is about to change. It has to change.

For years, good enough was just that. Today, however, few luxury brands can escape some powerful and inescapable facts:

  • Growth is stagnant. Only a handful of market segments are growing faster than inflation. This means real top-line growth must come from stealing market share. One-size-fits-all and simplistic “mass-customization” strategies won’t cut it.

  • We’re swimming in a sea of sameness. The web – and all things digital –has overwhelmed the consumer with choices. With few exceptions, many products and services are largely indistinguishable from each other – or at least it’s easy to find cheaper, near substitutes. Free shipping, endless sales and the use of reward points as thinly veiled discounts have become ubiquitous, and as a result are rarely meaningful ways to distinguish a brand.

  • Attention is the scarce commodity. The distracted consumer is the norm. Faced with an endless aisle of options, access to just about any piece of information they want and their fingers poised to hit “delete” or open a new tab, consumers are clearly in control. The bar continues to be raised on what it takes to break through the clutter, much less garner even a modicum of attention.

  • Mobile is the new customer-engagement playing field. Virtually every luxury brand’s target consumer has a smartphone, and most use them to complement their shopping experiences. If a brand is not top of mind and compelling on the small screen, there is a good chance the company may not even get a crack at the customer’s business.

In this rapidly changing and increasingly challenging environment, the marketer’s imperative is to deliver more of a signal amidst all the noise. To stand apart, loyalty marketers must carry the brand experience from merely interesting or value-added to remarkable, more intensely relevant and personal.

Deep customer insight is the starting point. Treating different customers differently is the goal.

Brands must push beyond customer value (RFM), affinity modeling, demographic data analysis and the other tired war horses of traditional direct marketing, and create segmentation schemes that unpack the motivators of engagement, retention and brand advocacy. Resources must be distorted to better understand consumers as individuals, not targets or clusters.

Insight is not useful unless it’s put into action in the proper context. Here are four key elements I see as essential to making just about any brand’s marketing and loyalty strategies more relevant, more compelling and more personal.

1. Unified

Consumers are using any and all channels to go through their decision journey. Customer data across channels and touch points must be integrated and used consistently to inform decision-making. Most marketing interactions must reflect an anytime, anywhere, anyway perspective. One brand, many channels should be the guiding mantra.

2. Individualized

To pay attention in the first place – much less act on a company’s marketing messages – the consumer needs to feel that “this brand knows me, it consistently shows me it knows me and it regularly shows me it values me.” Unique customer identification and distinctive treatment and offers need to be dialed up in most brands’ marketing mix.

3. Localized

With more and more consumers using mobile devices to enhance their shopping experiences, there is a huge opportunity for what I like to call “right-time marketing.” Geo-location technology, employed judiciously, adds an element of context that increases the odds that offers will be meaningfully more customer relevant.

4. Amplified

It’s been years since Seth Godin reminded us of the value of finding our “Purple Cow.” Godin’s admonitions have never been more relevant. The only way to stand out in a sea of sameness is to amplify a dimension of the business model that is meaningful to core customers and that a brand can ultimately own. Stated differently, brands must choose and distort a signal to break through the noise. If strategic, and perhaps a bit lucky, an organization can tap into the essence of remarkability by inspiring customers to advocate for the brand and amplify its message.

The promise of personalization has been around for many years. Until recently, the technology did not exist to scale most of these approaches. Moreover, there was not a compelling business case to invest in the incremental cost and complexity that robust personalization requires.

Marketing science and technology have advanced to the point where pragmatic and affordable solutions are becoming readily available. Most importantly, market dynamics require most brands to re-evaluate much of what they are doing. Mass marketing programs are becoming less effective literally by the minute. One-size-fits-all strategies are getting diluted in the ether. If you’re not relevant, the customer stops listening. Any measure of trust that may have been built up is easily lost.

In a competitive world that looks like a zero-sum game for many companies, the only chance for success is to become meaningfully more relevant than the next guy.

So this time it’s not about who is bigger, faster or cheaper. It’s about who gets closest to the customer. This time it’s personal.

Meet The Author

Steven Dennis

With more than 25 years of retail, consumer and luxury brand experience, Steven Dennis specializes in bringing customer-focused growth and marketing strategies to life. He is president and founder of SageBerry Consulting, which works with retail and luxury brands and investors.

Prior to founding SageBerry in 2009, Steven was the Neiman Marcus Group's senior vice president of strategy, business development and marketing. He also managed the company's private label credit card partnership and led the redesign of the InCircle Rewards program. Prior to joining Neiman Marcus, Steven held various senior leadership positions with Sears Holdings, including acting chief strategy officer, Lands' End acquisition integration leader and vice president of multi-channel integration.

Steven is an executive-in-residence at SMU's Cox School of Business and a partner and board member with Social Venture Partners-Dallas. He also serves as Board Chair of the DFW Retail Executives Association and on the advisory boards of Invodo, Nectar Online Media and Education Opens Doors.

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