We recently caught up with Dr. Chip R. Bell, a world-renowned authority on customer loyalty, to get his thoughts on premium loyalty programs.
In this interview, Chip shares how he views these programs in today’s retail marketplace, the benefits they provide retailers, and what the future holds for customer loyalty. He also discusses what attributes retailers need to consider when asking themselves what to consider offering their customers.
Jim Tierney (Clarus): Can you talk about how you think premium loyalty programs are viewed in today’s retail marketplace?
Dr. Chip R. Bell: Customers value loyalty programs when they feel natural, not contrived, customer-centric, not manipulative and are crafted around needs important to customers. They also need to easily understood and uncomplicated to use as a customer. More detail below.
Jim: What do you see as the main benefits to a retailer implementing a premium loyalty program?
Chip: Retention and advocacy. Keeping customers you have and want to keep means creating programs that add value in a myriad of ways. Amazon is a great example. However, the greatest premium loyalty programs create advocates, not just retained customers—think of these customers as cult-like groupies.
Jim: What do you see as the main concerns a retailer might have regarding a premium loyalty program?
Chip: Making the investment without a return. Making the investment and having it backfire and not work. Causing a turn-off to customers (none of us like the feeling of being a part of a con job). Having it become a flash in the pan – A lot of initial hype, but then fade away.
Jim: New research this year shows that the interest in premium loyalty is growing. What do you foresee for premium loyalty programs?
Chip: The future is in experiential premiums, not just feature premiums or traditional affinity programs. Watch for Disney World to create a premium program that cements loyalty through offerings only available to the “fan club” members and is an exclusive experience at a theme park.
Jim: Amazon Prime is the ultimate example of a successful premium loyalty program with now more than 100 million global members. Why do you think Amazon Prime is so successful?
Chip: Because it is intrinsically pure – That is a natural extension of the service, and not viewed as an add-on.
Jim: What attributes of Prime do you think retailers should consider for their own customers?
Chip: Center your program around what matters most to customers. Take your advertising hat off and replace it with your customer-centric hat. Ask these seven questions:
- Do the benefits enrich the overall offering?
- Does it feel like a true value and not just an artificial or superficial one?
- Would it be an offer like a good friend might make?
- Does it elevate or reinforce the core values of the offering company?
- Is it simple and easy for the customer to use?
- Is it something a 9-year old would easily understand and comprehend?
- Is it sustainable?
Jim: Traditional loyalty programs focus more on acquisition, where premium loyalty programs focus more on retention. In your opinion, what are the most compelling selling points for a premium loyalty program?
Chip: They add value to the overall offering, especially if they are intrinsically pure. The body rejects a foreign intrusion. Great premium loyalty programs feel like they were built right along with the product or service offering, not as an afterthought or add-on.
The Best Loyalty Programs are Intrinsically Pure
The biggest takeaway from Chip is this – The most successful loyalty programs are intrinsically pure. In other words, they’re not an afterthought or gimmicky. The program benefits enrich and elevate the core of the brand itself.
Premium loyalty programs are pure by nature. The benefits are so good that customers willingly raise their hands to pay for them. Simple. These programs genuinely put the customer at the center of everything. These are the loyalty programs of the future.
Chip R. Bell is an author, keynote speaker, and consultant in customer loyalty and service innovation. He is known for his work in mapping the customer journey as part of the customer service experience and customer forensics®.