Chapter 4 of Loyalty 3.0 is all about the relationship with the customer. Building deeper and more meaningful relationships with customers can greatly benefit a business. Paharia describes the traditional route of Loyalty programs and money back programs are not as able to impact as interactive and personalized programs.
This reminds me of what we talked about in class, the Starbucks rewards program takes the data collected from previous order history and the patterns from these orders and personalizes reward options for the customer. Starbucks was the blueprint for a lot of other reward programs, and they have been super successful. The personalized rewards are unique for the specific person, making them more prone to use the deal that is offered.
The chapter starts with the difference between transactional loyalty compared to emotional loyalty. When the loyalty is transactional it is usually based on the rewards. This is usually what a person can get a discount on, a free product with purchase, etc. Although this is great, emotional loyalty is much more effective.
Emotional loyalty is built when a customer feels a deeper connection with a brand. As mentioned before, Starbucks rewards program is a good example of this because of their personalization. The rewards and benefits that directly related to the customer resonate with what they want. Companies can do this through leader boards, challenges, and points this makes the rewards more interactive, giving the customer emotional stimulation.
Loyalty programs that specifically incorporate games and points are good to gain loyalty. It gives short term motivation to keep playing and checking, making them emotionally invested with that brand. When it becomes fufilling, it keeps the customer thinking about that brand and coming back.
Paharia emphasizes that the data collected from engagement like this is just as valuable. Gaining insight to your customers and their preferences make for a deeper relationship with the customers. The most successful brands will create loyalty by creating a community with their loyalty members. The customers should feel involved with the company and included in the experience. Overall, the relationship built through the customer and business will reflect the success and loyalty of its members.
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