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Loyalty Programs Are More Than Just Repeat Business

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The Hidden Revenue Engine

Loyalty Programs Are More Than Just Repeat Business

GUEST POST from Shep Hyken

Loyalty programs have evolved far beyond their humble beginnings as simple “earn and burn” points systems. While many still view them primarily as marketing tools to drive repeat business, today’s loyalty programs have become sophisticated revenue engines that can significantly impact a company’s bottom line.

Consider this surprising statistic from our annual customer service research: 46% of U.S. consumers are willing to pay more for companies that have good loyalty programs. Even more telling, 39% have chosen one brand over another, even if it is more expensive, simply to earn more points in a loyalty program.

The transformation of loyalty programs into revenue generators became especially apparent during the Covid-19 pandemic. While airlines were grounding their fleets, their loyalty programs were still generating substantial revenue through partnerships with credit card companies and other businesses. If you use a credit card tied to your favorite airline, you have experienced this firsthand. You don’t have to fly on the airline to continue to earn points and awards. This revelation led to some interesting valuations of these programs, sometimes worth more than the core business itself.

I had a chance to do an Amazing Business Radio interview with Aleksander Kaczmarek, the vice president of loyalty at CarTrawler. CarTrawler offers a technology solution that connects car rentals to brands such as American Airlines, Uber, Emirates, American Express, Hilton and many other brands you are familiar with. If you’ve ever bought an airline ticket or booked a hotel and were asked if you needed a rental car, you may have experienced CarTrawler.

According to Kaczmarek, modern loyalty programs are far more powerful than the points and awards most people think of. They’ve evolved from simple point-collection systems into sophisticated customer engagement platforms. Today’s programs leverage technology to create seamless experiences that encourage customers to interact with brands in multiple ways. For example, many retailers’ loyalty apps now include features like mobile payments, personalized recommendations and exclusive access to products or services.

Kaczmarek says revenue potential comes from three key areas:

  1. Direct Program Revenue: This includes membership fees (think Amazon Prime or Walmart+) and partnership revenues from other businesses that want access to the program’s member base.
  2. Increased Customer Spending: Loyalty program members typically spend more than non-members, partly because they’re trying to earn rewards and partly because the program makes it easier to do business with the company. (This is reflected in our research and the findings mentioned at the top of the article.)
  3. Data Monetization: The insights gained from loyalty program data can help companies make better inventory decisions, create more effective marketing campaigns and identify new business opportunities.

According to Kaczmarek, the most successful programs share several characteristics that drive both customer engagement and revenue:

  • More than Points: They offer immediate value beyond points accumulation, such as priority service or exclusive access.
  • Emotional Connection: They create emotional connections through experiential rewards rather than just transactional benefits.
  • Partnerships with Other Businesses and Brands: They leverage partnerships to expand their value proposition beyond their core business.
  • Using Technology for a Better CX: They use technology to deliver a seamless customer experience across all touchpoints

However, companies need to strike a careful balance. Kaczmarek says, “There’s often debate about whether loyalty programs should focus on generating revenue or enhancing customer experience. The truth is, they need to do both.”

This dual focus is crucial because customers aren’t loyal to the program—they’re loyal to the experience the company provides. A great loyalty program can enhance that experience and drive revenue, but it can’t compensate for poor service or products.

Kaczmarek notes that the future of loyalty programs goes beyond anything we’re seeing today, especially in the travel industry. “Looking ahead, we’re seeing innovative approaches to loyalty programs emerge. Some cities and business districts are exploring ‘destination loyalty’ programs that reward customers for engaging with multiple local businesses. Others are creating coalition programs where complementary businesses share a single loyalty platform.”

So, whether you’re a small local business or a major corporation, loyalty programs can be more than just a customer retention tool. When properly designed and executed, they can become a significant source of revenue while strengthening customer relationships.

Just remember, the typical loyalty program doesn’t actually create loyalty. It is a marketing program that simply rewards and reinforces repeat business. True loyalty still comes from consistently delivering great experiences that make customers want to say, “I’ll be back!”

Image Credit: Shep Hyken

This article originally appeared on Forbes.com

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Creating Long-Term Customer Loyalty

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Creating Long-Term Customer Loyalty

GUEST POST from Shep Hyken

Many years ago, I sold a home. My real estate agent made a value proposition for me. If I hired her to sell my home, I could walk out of the house and never come back. She would manage everything related to maintaining the home and keeping it “showroom ready.” That included lawn care, cleaning and much more. If anything broke, she would take care of. If a painter needed to touch up a wall, she would hire “her painter.” Other than showing up at the closing to sign papers, my only responsibility would be to reimburse her for any expenses she incurred.

She explained that she had a network of preferred vendors who gave her preferential pricing, and she would pass only the actual costs onto me. In addition to her stellar reputation, what she promised to do—make selling my house easy and hassle-free—was the reason I hired her.

At the time, I wondered, “Why don’t other real estate agents do this?” Another question was, “Why don’t more businesses, regardless of the industry they are in, do this?”

It turns out there are people, companies and brands that do. However, many struggle to put together a program like this and find out it’s harder than they thought. Furthermore, what if a company could profit from these recommendations and referrals? What if the referrer received a commission or finder’s fee for recommending the right vendor?

Meet Mikhail Naumov, the founder and CEO of Paylode, a company that helps his clients do exactly what my real estate agent did for me. Naumov says, “If you’re a car company, you’re selling cars. If you’re a pet adoption agency, you’re helping people adopt a new puppy. For the most part, that’s where your job begins and ends. However, the moment the customer buys a car or adopts a puppy, they suddenly have a dozen other problems or pain points they now must solve due to the purchase.”

Naumov’s version of my real estate agent story is that he moved from California to Miami, rented an apartment, and the moment he signed the lease, he thought, “I now need to find renter’s insurance, moving trucks, a storage unit, furniture, appliances, food and more.” His entrepreneurial mind kicked in and he realized there was an opportunity to help apartment rental companies (and now companies across many other industries, including travel, hospitality, and insurance) create a system to take care of their customers’ secondary and tertiary needs. His company, Paylode, was born.

Paylode helps its clients find companies and vendors that their customers need. Sometimes the clients get a referral fee. They typically negotiate discounts that get their customers better rates, and even with the referral fees, the customer still saves money.

While this offers Paylode’s clients an alternative revenue stream by monetizing the products and services they recommend, Naumov quickly realized that it was not the most important reason. The No. 1 reason is making the client’s life easier by helping them with what they need, related to but outside of what their actual business does. This ultimately creates a better customer experience, which in turn drives core business metrics (i.e., retention, engagement, LTV, repeat purchase, and more).

In a sense, the Paylode program is like offering a perk to the customer. Naumov says, “We live in an incentive economy.” Customers love to be rewarded with a perk for doing business with a company. That perk could be, as mentioned, a negotiated discount with a secondary business. But what if you took that further and offered other perks? For example, an apartment rental company could offer six months of free internet with popular streaming channels like MAX and AppleTV. A perk like that becomes an incentive behind a customer’s buying decision, which is why Naumov has named this feature of his platform “Paylode Boost,” focusing on a perk that incentivizes a customer to take a desired action, or choose one company over another.

Companies and brands spend most of their time focused on their own business. Naumov says they have tunnel vision and makes the case for companies from all industries—both B2C and B2B—to step outside of that tunnel and think about their customers’ needs beyond the core product or service they offer. It starts by asking the question, “What new problems show up in my customers’ lives as a consequence of buying from me?”

Sit down with your team and work out the answer, and consider Naumov’s suggestion to “Help customers solve those secondary and tertiary problems in a way that creates loyalty, engagement and gratitude from your customers for life.”

Image Credits: Unsplash

This article originally appeared on Forbes.com

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How to Create a Good Loyalty Program

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GUEST POST from Shep Hyken

What is a loyalty program? It’s a program designed to get customers to come back. That’s different than true customer loyalty, but it’s a pretty darn good start. In our 2024 State of Customer Service and CX research (sponsored by RingCentral), we included a section of questions that focused on customer loyalty and rewards programs. Before we get into the findings, let’s look at three examples of some of the best.

1. Amazon Prime: When I Googled the question, “Is Amazon Prime a membership program or a loyalty program?” the first answer came from an NBC News article that included this description: “Amazon Prime is Amazon’s paid loyalty program. …” First, Amazon offers tremendous value for its program, including free shipping, Prime TV and more, which by itself is worth paying for. However, there is also the psychology that if you pay for something, you want to get value from it, so use it. Therefore, many Amazon customers choose Amazon over competitors because they pay for the loyalty program and want to get the most value from it. Of course, Amazon is known for its stellar customer experience, so that combined with the Prime program gives it a competitive advantage over other online retailers.

2. Restoration Hardware: When you pay $200/year for its RH Members Program, you get 25% off all full-priced merchandise and 20% additional savings on sales items. In addition, you get complimentary access to its designers. The RH program is more of a discount program than a true loyalty program, but it does what it’s supposed to do, which is to get customers to come back. Like Amazon, I Googled the RH Members Program to see what others said, and many referred to it as a “Premium Loyalty Program.” And with that premium price, an RH customer expects a premium customer experience, and Restoration Hardware delivers.

3. American Airlines: American Airlines consistently ranks high among frequent flier programs, and The Points Guy rates AA as the best for earning status without ever flying. Using the AA credit card (most airlines have affiliations with credit card companies), you can rack up miles for free trips and status. An Omnisend.com article on loyalty programs included AA as the only airline in its list of 10 Businesses with the Best Loyalty Programs. I’ve been in the AA program since the 1980s and have amassed miles, perks and status. Reaching any level of status on the airline gives you more than perks. Employees recognize when passengers are members of their program and, quite simply put, “They treat you right.”

These are examples of paid and/or free loyalty programs and membership programs. There could be a book written to describe the many versions of loyalty programs. Most are marketing programs, focused on repeat business. There are points, discounts, perks, and now, experiences. Zsuzsa Kecsmar, co-founder of Antavo, a customizable loyalty platform and publisher of the Global Customer Loyalty Report, adds, “Loyalty programs used to be earn-and-burn. You spend a dollar and earn a point. But today’s loyalty programs can do much more with experiential rewards, early access and rewarding other activities outside of purchasing.”

As mentioned, are many versions of loyalty programs. A restaurant may offer a punch card where every fifth sandwich is free. Customers may be willing to pay to be part of a “loyalty program” to get perks and discounts. With all that in mind, here are some interesting findings from our research to help you decide if the effort to create a loyalty program is worth it:

  • 61% of customers said rewards programs were important to giving a company or brand repeat business.
  • 46% are willing to pay more for a company or brand that has a good loyalty or rewards program.
  • 76% are more likely to return to a company that has a good customer rewards program.
  • 57% would choose to switch to a brand that has a loyalty program if another brand did not.
  • 55% have recommended a brand or company to others because of its loyalty program.
  • 39% have made an unplanned purchase just to earn more points or rewards.

If a loyalty program is part of your business model (or if you’re considering it), these findings make the point. The numbers make a compelling argument for developing a loyalty program. The last finding is especially intriguing. Almost four in 10 customers made a purchase just to earn more points or rewards.

Realize that a loyalty program is more often a marketing program. Some consumers become loyal to the program more than to the company or brand. True loyalty is about a customer being emotionally connected to a company, not just to the perks and points in a loyalty program. If you combine an amazing customer experience with a loyalty program, you have a winning combination.

Image Credits: Unsplash

This article originally appeared on Forbes.com

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Top 10 Human-Centered Change & Innovation Articles of April 2023

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Top 10 Human-Centered Change & Innovation Articles of April 2023Drum roll please…

At the beginning of each month, we will profile the ten articles from the previous month that generated the most traffic to Human-Centered Change & Innovation. Did your favorite make the cut?

But enough delay, here are April’s ten most popular innovation posts:

  1. Rethinking Customer Journeys — by Geoffrey A. Moore
  2. What Have We Learned About Digital Transformation Thus Far? — by Geoffrey A. Moore
  3. Design Thinking Facilitator Guide — by Douglas Ferguson
  4. Building A Positive Team Culture — by David Burkus
  5. Questions Are More Powerful Than We Think — by Greg Satell
  6. 3 Examples of Why Innovation is a Leadership Problem — by Robyn Bolton
  7. How Has Innovation Changed Since the Pandemic? — by Robyn Bolton
  8. 5 Questions to Answer Before Spending $1 on Innovation — by Robyn Bolton
  9. Customers Care About the Destination Not the Journey — by Shep Hyken
  10. Get Ready for the Age of Acceleration — by Robert B. Tucker

BONUS – Here are five more strong articles published in March that continue to resonate with people:

If you’re not familiar with Human-Centered Change & Innovation, we publish 4-7 new articles every week built around innovation and transformation insights from our roster of contributing authors and ad hoc submissions from community members. Get the articles right in your Facebook, Twitter or Linkedin feeds too!

Have something to contribute?

Human-Centered Change & Innovation is open to contributions from any and all innovation and transformation professionals out there (practitioners, professors, researchers, consultants, authors, etc.) who have valuable human-centered change and innovation insights to share with everyone for the greater good. If you’d like to contribute, please contact me.

P.S. Here are our Top 40 Innovation Bloggers lists from the last three years:

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The Loyalty Gap

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The Difference Between Repeat Customers and Loyal Customers

The Loyalty Gap

GUEST POST from Shep Hyken

In a recent Shepard Letter, I discussed the Trust Gap, which is the difference between an organization’s belief that their customers trust them and the percentage of customers who actually do. I’ve covered different gap concepts in the past, and it’s time to add yet another to the list, and that is the Loyalty Gap.

By the way, this is a perfect time to mention International Customer Loyalty Month, which happens every year in April. It is a time to focus some extra care and attention on your loyal customers. You can learn more at www.CustomerLoyaltyMonth.com.

So, back to the Loyalty Gap. This is the gap between the percentage of customers you think are loyal and customers who actually are loyal. If you’ve been following my work, you may remember that I preach there is a big difference between a repeat customer and a loyal customer. A customer that comes back again and again could be mistakenly labeled as a loyal customer. Before we can call someone a loyal customer, we must find out why they keep coming back and buying from us. And there are many reasons why customers might return that have nothing to do with being loyal. For example:

1. The Price Is Lowest: Customers who buy based on low price aren’t loyal to you. They are loyal to the price. The moment a competitor has a lower price, the customer disappears. And you thought they were loyal!

2. The Location Is More Convenient: Does the customer buy from you because you are closer than your competition? You don’t know if you don’t ask. As soon as a competitor moves into the area, if their location happens to be more convenient, the customer moves on. Again, you thought they were loyal!

3. The Customer Is Satisfied: This one is super important. There’s a big difference between a satisfied customer and a loyal customer. Satisfied customers are just … satisfied. The experience is good, but not great. It’s enough to get them to come back until they find another brand or organization that satisfies them just a bit more.

A loyal customer not only comes back but also spends more than a typical customer and evangelizes your brand by sharing word-of-mouth referrals. This is because there is an emotional connection. Maybe it’s the way the customer is treated. Or maybe there is an employee the customer loves to work with. Maybe it’s the confidence that’s created when a customer interacts with the brand. There are many reasons, but they all evoke an emotional connection.

So, what’s the Loyalty Gap in your business?

Do you understand your customers’ buying patterns?

Do you know why they come back?

In a perfect world, there shouldn’t be a gap. But that’s not reality. There will always be customers who don’t have the emotional connection needed to drive loyalty. There’s nothing you can do but keep trying. For the rest of your repeat customers, understand why they return, then keep delivering the experience that makes them want to return.

Image Credit: Pexels

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How to Turn Customers into Superfans

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How to Turn Customers into Superfans

GUEST POST from Shep Hyken

What do Apple, Zappos, and Chick-fil-A have in common? They are considered “rockstar” brands. Their loyal customers—and they have many—keep coming back and evangelizing these brands, singing their praises to the world. The customers are also willing to defend their favorite brand should someone say something negative about it.

There is a word to describe these types of customers. They are fans, and more specifically, they are superfans. Brittany Hodak may be the foremost expert on the concept of creating superfans in business. In her recently published book, Creating Superfans: How to Turn Your Customers Into Lifelong Advocates, she defines a superfan as “a customer or stakeholder who is so delighted by their experience with a brand, product or service that they become an enthusiastic advocate.”

Hodak’s mantra is:

If your customers aren’t telling their friends about you, you’re in trouble.

So, how do you get your customers to come back, defend your reputation, and spread compliments about you? Follow Hodak’s SUPER model. The word SUPER is an acronym. To whet your appetite for this important literary contribution to the world of customer experience, I’ll share what each letter of the acronym means, followed by my commentary. Some of this is my own interpretation of Hodak’s model, but you will get the idea. So, here is Brittany Hodak’s SUPER model:

  • S – Start With Your Story: Sharing your “story” is powerful. Just make sure it’s the story that will get your customer excited about doing business with you. How should it start? Ask yourself, “Why does a customer want to do business with us (instead of our competition)?” Responses that are truly different will be important to the story. Hodak says, “Your story is your superpower.”

  • U – Understand Your Customer’s Story: Why do customers need you? The answer is their story, and when their story intersects with yours, you have the opportunity to do business, grow the relationship and create a superfan.

  • P – Personalize: The concept of personalizing the experience is a hot topic. Using data about the customer (in the right way) will create a connection. Abuse the data, and the customer will disassociate from you. Hodak uses Chewy, the online pet food, and supply retailer. The company not only know its customers’ buying habits but also often knows their pets’ names—and they use that information to create a better relationship and emotional connection with the customers. This is an excellent example of personalization.

  • E – Exceed Expectations: People often think exceeding expectations is difficult. The reason is because they confuse exceeding expectations with going above and beyond. There are opportunities to do that in special situations, but most of the time, you just need to be a little better than expected. Even the slightest bit better. When you’re at a restaurant, and you are told the wait will be ten minutes, but your name is called in eight minutes, that’s an example of exceeding expectations by being slightly better than expected. The key is to do this consistently. You want your customers to use the word always followed by something positive, such as, “They are always helpful,” to describe their experience with you.

  • R – Repeat: I love the idea of repeat. Create the system with an outcome that drives a positive customer experience every time. The key word here is system. A system can be scaled and is repeatable. It is consistent, and customers love consistency. If the initial experience was good, the next time they come back, they want more of the same. When it happens again and again, the customer “owns” the experience. They can count on it happening. Their confidence about the experience is so high they not only come back, but they also tell others. Creating superfans is an everyday, never-ending effort. Do what works again and again.

Okay, I admit it. I’m a Brittany Hodak superfan. I fall under the category of evangelizing her brand, and recommending her to clients, and now I’m writing about her book. I’m a perfect example of one of the ways Hodak describes a superfan, which is a great way to wrap up this article:

Superfans are customers who create more customers!

This article was originally published on Forbes.com.

Image Credit: Shep Hyken

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Trader Joe’s Loyalty Program Has No Points or Perks

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Trader Joe's Loyalty Program Has No Points or Perks

GUEST POST from Shep Hyken

If you’ve shopped at a Trader Joe’s grocery store, you are familiar with their combination of high-quality products and a great customer experience delivered by friendly, helpful, knowledgeable employees, also known as teammates. The retailer has an incredibly loyal base of customers. Its loyalty program, if you want to call it that, has nothing to do with points or perks. There’s no loyalty card to punch. Its loyalty program is simply about creating enough value to turn a one-time customer into a loyal customer.

This type of loyalty is the envy of many retailers—and any other business with a formal “loyalty program.” It’s been my position that most loyalty programs aren’t really based on loyalty. They are marketing programs that drive repeat business. Often there are incentives such as points that accrue for free merchandise and discounts. Take the airlines, for example. Almost all have a frequent flier program that offers points/miles and perks to returning passengers. The more you fly, the closer you get to a free trip or a complimentary first-class upgrade. But what happens if the points and perks go away? Would the passenger still choose that airline? Or would they go with an airline that offers a lower price or a more convenient schedule?

True loyalty is about an emotional connection. The customer enjoys the experience, the products and the employees so much that they wouldn’t think of doing business elsewhere. And as a bonus, this level of loyalty makes price less relevant.

This is precisely what Trader Joe’s has done. Without the typical customer loyalty program, it has created an experience that drives repeat and loyal business. In a sense, it is a throwback to an era of simply taking care of the customer with a good, old-fashioned customer experience and product quality. Furthermore, they don’t participate in e-commerce and other shopping options that you might find at other grocery stores and retail outlets.

Is this type of loyalty sustainable? It’s worked in the past. It’s Trader Joe’s brand reputation. Will it take them into the future?

In a recent RetailWire article, experts weighed in on the question, “Will the lack of e-commerce, a loyalty program or discounts found at other grocers become bigger liabilities for the chain down the road?”

Neil Saunders, managing director of GlobalData says, “The lack of e-commerce at Trader Joe’s may not be everyone’s preference. However, the proposition is so strong across so many attributes—value, quality, taste, uniqueness of offer—that most consumers are willing to overlook this and visit stores. This shows up in Trader Joe’s strong trading numbers over the past few years: it has gained market and shopper share.”

Bob Amster, principal at Retail Technology Group, says, “The store experience is the brand at Trader Joe’s. They are unequaled in their segment.”

George Anderson, editor-in-chief at RetailWire, weighs in with his comment, “Trader Joe’s rationale has been that it offers the lowest price possible to customers on a day-in and day-out basis and that added expenses such as loyalty programs will only drive prices up. The company counts on developing true loyalty with its customers, in the human sense, by offering products they value and backing them up with a no questions asked and no receipt required guarantee. It also excels at hiring people who are true brand ambassadors who customers value for their knowledge and willingness to help. If there was ever a retailer that didn’t need a loyalty program—Trader Joe’s is it.”

There are many more comments, and most of them reflect the views of the experts above.

Trader Joe’s is a benchmark of value that other retailers (not just grocers) should aspire to reach. They have good products, competitive pricing and incredible service. That keeps them in the game—and at the top of the game. And as for a loyalty program, Trader Joe’s already has one. It’s their customer experience. That’s what gets customers to say, “I’ll be back!”

This article originally appeared on Forbes

Image Credit: Pixabay

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Gamification Techniques to Increase Engagement

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Gamification Techniques to Increase Engagement

GUEST POST from Art Inteligencia

In a world increasingly driven by digital interaction, keeping people engaged is a pressing challenge. Gamification—a strategic attempt to enhance engagement through game-like elements—offers a compelling solution. As organizations seek innovative ways to captivate audiences, understanding and applying gamification can transform the user experience, whether in the field of education, marketing, or workplace productivity.

Understanding Gamification

Gamification applies game-design elements and game principles in non-game contexts. By leveraging users’ innate desires for competition, achievement, and self-expression, gamification can make mundane tasks more engaging and enjoyable. Techniques include point scoring, leaderboards, badges, and narrative elements, all woven into non-game environments to boost interaction and satisfaction.

Implementing Gamification: Key Techniques

There are several key techniques that can enhance engagement through gamification:

  • Point Systems: Assigning points for completed tasks can motivate users to progress through content.
  • Leaderboards: Creating competitive scenarios encourages participants to achieve more to surpass their peers.
  • Badges and Rewards: Recognizing achievements with badges or tangible rewards provides goals and fosters a sense of accomplishment.
  • Missions and Levels: Structuring participation in levels or missions can create a journey-like experience, promoting continuous engagement.

Case Study 1: Duolingo

Background

Duolingo is a well-known language-learning platform that uses gamification to encourage learners. The platform’s design incorporates point scoring, skill trees, and streak counts, making the learning process engaging and addictive.

Outcomes

By transforming language education into a game, Duolingo has successfully maintained a sizable active user base. Users are motivated to practice daily to maintain streaks and earn learning milestones, resulting in a high level of sustained engagement.

Case Study 2: Starbucks Rewards

Background

The Starbucks Rewards program incorporates gamification strategies to incentivize purchases. Customers earn stars for each transaction, which can be redeemed for free items, encouraging more frequent visits.

Outcomes

This program has increased customer loyalty significantly. The element of earning and redeeming stars provides a satisfying cycle of achievement and reward, leading to increased customer retention and spending.

Concluding Thoughts

As these case studies illustrate, gamification can significantly enhance user engagement across various sectors. By tapping into basic human inclinations for achievement, recognition, and progress, organizations can transform engagement metrics and foster more meaningful interactions. Whether you’re looking to boost participation in educational programs or increase customer loyalty, gamification offers powerful tools to revolutionize the user experience.

Expanding Gamification: Beyond the Basics

While the fundamental techniques of gamification are powerful, digging deeper into psychological triggers can amplify results. Incorporating user feedback loops and adaptive challenges tailored to individual user profiles can refine the experience further. Moreover, meaningful storytelling can turn routine activities into epic missions, transforming perception and enhancing user commitment.

Integrating User Feedback

Given that gamification is rooted in user engagement, integrating continuous feedback loops allows for systems that adapt and evolve with user preferences, making the gamified experience feel fresh and personal.

Adaptive Challenges and Personalization

Creating personalized experiences by adapting challenges to match the skill level and interests of each user can keep participants in an optimal zone of engagement, where tasks are neither too easy nor too hard.

By staying informed about the latest trends in gamification and continuously refining strategies, organizations can leverage these techniques to not just engage, but truly inspire their audiences.

Extra Extra: Futurology is not fortune telling. Futurists use a scientific approach to create their deliverables, but a methodology and tools like those in FutureHacking™ can empower anyone to engage in futurology themselves.

Image credit: Pexels

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The Impact of Customer Experience on Brand Loyalty

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The Impact of Customer Experience on Brand Loyalty

GUEST POST from Chateau G Pato

In a world awash with choices and a never-ending stream of new brands vying for attention, the customer experience (CX) has emerged as the key differentiator that can significantly impact brand loyalty. From the immediacy of online interactions to the nuanced dynamics of in-store engagement, understanding and enhancing customer experience is crucial for building long-lasting relationships with customers. In this article, we’ll explore how brands leverage superior customer experiences to foster loyalty, illustrated through two compelling case studies.

Case Study 1: The Ritz-Carlton

The Ritz-Carlton stands as a benchmark in the hospitality industry when it comes to delivering exceptional customer experiences. At the heart of their service philosophy is a simple, yet powerful credo: “We are Ladies and Gentlemen serving Ladies and Gentlemen.” But it is not just a tagline; it’s a commitment to ensuring that every interaction is magical for their guests.

One of the keys to The Ritz-Carlton’s success in driving brand loyalty is their focus on personalizing guest experiences. Employees are empowered to spend up to $2,000 without management approval to resolve a guest issue, which demonstrates their commitment to ensuring customer satisfaction. For instance, there is a famous story of a Ritz-Carlton staff member noticing a child forgot their stuffed toy at the hotel. The staff not only returned the toy but also included some photos of the toy’s “extended vacation” to delight the child. Such efforts cultivate emotional connections and drive brand loyalty, making guests feel valued and appreciated.

Case Study 2: Amazon

Amazon has revolutionized the retail landscape with its relentless focus on the customer experience. From the very beginning, CEO Jeff Bezos established a culture that prioritized customer-centricity above all else, often at the expense of short-term profits.

A quintessential example of Amazon’s commitment to customer experience is their seamless and intuitive user interface, which makes shopping an effortless experience. The introduction of features like one-click purchasing and personalized recommendations has greatly enhanced the shopping experience, increasing convenience and satisfaction. But perhaps the most significant impact on brand loyalty comes from Amazon Prime. By offering benefits such as free shipping, exclusive discounts, and original content, Amazon has created a robust ecosystem that keeps customers engaged and loyal. As a result, Amazon Prime members spend significantly more annually than non-members, demonstrating the strong link between a superior customer experience and brand loyalty.

Conclusion

As the cases of The Ritz-Carlton and Amazon illustrate, brands that excel in customer experience often see a corresponding rise in customer loyalty. Whether it’s through personalized service or continuous innovation, companies that invest in understanding and enhancing their customer experience stand a better chance of maintaining their competitive advantage and nurturing lasting relationships with their customers. In an era where customer expectations are higher than ever, focusing on the customer experience isn’t just a business strategy; it’s a necessary commitment to sustain brand loyalty in the modern marketplace.

Bottom line: Futurology is not fortune telling. Futurists use a scientific approach to create their deliverables, but a methodology and tools like those in FutureHacking™ can empower anyone to engage in futurology themselves.

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Black Friday Shows No Loyalty

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Black Friday Shows No Loyalty

Marketers love to hold up points-based loyalty programs as proof of their contribution to their company’s financial success through repeat purchase behavior.

But traditional loyalty programs are nothing more than complicated, and expensive to manage, discount programs.

Black Friday is a faux holiday devoted to the religion of discounting.

This begs the question…

Do Black Friday deals do anything to create loyalty of any kind?

The idea behind Black Friday deals is almost as old marketing – the loss leader.

By offering one or more items at a substantial discount, the company and its marketers hope that a larger than normal group of potential customers will flood the shop (physical or virtual) and buy the loss leader (aka Black Friday deal) AND many other items they may (or may not) have been intending to buy.

Whether this is how it plays out in practice is a closely-guarded secret and debatable at best. Complicating the situation is the fact that Black Friday has become a virtual arms race that companies of all shapes and sizes are almost forced to participate in.

This means that nearly every retailer is offering some sort of Black Friday deal today, resulting in consumers:

  1. Best Case — Your existing customers start at your shop (online or virtual) and make a transactional purchase of one of your Black Friday deals (usually unprofitable for the company) and hopefully many other products or services to make your existing customer’s overall purchase profitable, plus they tell their friends and families to shop with you

  2. Worst Case — Your existing customers buy nothing or only your Black Friday deals, tell none of their friends and family, and you spend a lot of money on advertisements to attract non-customers to your shop that only buy your Black Friday deals

One of my marketing professors at London Business School – Mark Ritson – recently published a very funny video on the relationship between marketers and consumers:

Bridging the Gap Between Black Friday Deals and NextGen Loyalty

Marketers have an overly optimistic perspective on customer loyalty and their implementations of customer loyalty programs.

The reality is that very few customers are loyal and much of what we speak of as customer loyalty is no more than repeat transaction behavior.

In my article Next Generation Loyalty – Part One I look at how to excavate sources of NextGen Loyalty using Loyalty Archaeology™.

True loyalty (customer or otherwise) is when someone engages in a behavior that is not in their most obvious best interest because of a higher commitment.

Very few customers will ever behave against their best interests, but engaging in Loyalty Archaeology™ you can better understand where the value comes from in your products & services and work backwards to identify potential sources of customer loyalty.

Continue reading Next Generation Loyalty – Part One here.

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