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Maximising the impact of loyalty innovation

Some brands, it seems, are targeting ever-greater engagement, whether through clever use of emerging technologies, advanced loyalty or marketing techniques, or even building upon their brand values and taking a fresh approach to how they manage the customer experience.

Specific loyalty marketing strategies and reward programmes are just one element of driving customer loyalty. Some brands differentiate at brand level with a focus on embedding loyalty at the heart of their culture and values, whereas others innovate within a loyalty initiative or programme. Whichever route is taken, the key is to challenge how to do things differently to better meet the needs of customers.

Here are just a few of the brands to be watched or even followed for their interesting and innovative approaches to loyalty and engagement today:

• Apple is an iconic brand and the innovations never cease: new store concepts, the 'geeks' at the Genius Bar, iTunes, iCloud, iOS6, Apple Passbook and iTravel. But perhaps Apple's greatest achievement is how it builds loyalty into the core of its products and experiences. Their pre- and post-sale support is literally, pure 'Genius' - a recent study from market research group NPD found that 60% of Apple owners are more likely to buy Apple again because of their positive experience with Apple's in-store technical support.
• Virgin America - one of the true innovators in the airline space - recently announced a prize of a sub-orbital space flight on Virgin Galactic for its most frequent flyer. Not only does this utilise the assets owned by the Virgin group of companies, but it also offers a money-can't-buy experience. The programme offers its everyday frequent flyers a raft of innovations, perks, bonuses and benefits that are easily accessible.
• KLM - whose innovative Surprise social media engagement campaign combined social data with the classic loyalty elements of surprise and delight. Based on passenger's social media activity they KLM delivered personalised gifts in real time to a targeted group of loyal customers flying from Amsterdam's Schiphol airport. These gifts were personalised based on insight gleaned from passenger's social profiles (see video). Furthermore they have recently launched a new feature called ' Meet & Seat' - which allows passengers to view each other's Facebook or LinkedIn profiles (if authorised) and choose a seat based on whom they want to sit next to.
• Zappos has built itself on a culture of providing the ultimate customer experience, and going 'above and beyond' the call of duty. The company's commitment to staff empowerment delivers 'random acts of kindness' to both surprise and delight customers. Zappos are the masters at customer experience and service, showing how to drive customer loyalty without a formal rewards programme.
• Starbucks recognised the importance of customers in the innovation process with the launch of MyStarbucksIdea in the US, through which customers can submit ideas on how to improve the business via Twitter. With over 70,000 ideas submitted in the first year, the strategy ensured that customers felt empowered and part of the brand experience. For example Starbucks used feedback from MyStarbucksIdea to add mobile payments (through the Starbucks App) even at drive-thru windows. Not only do customers remain engaged with the brand across all channels, but data is captured to allow more personalised offers.
• Nike+ is a fitness app that works by tracking the performance of runners through a wireless connection and GPS. By attaching a sensor to a running shoe, Nike+ can track time, distance, pace, calories burned and other details as you run. Nike+ has become a case study for marketers around the world for a number of reasons, but it's the seamless GPS integration that makes it such a compelling example of Social-Location-Mobile or 'SoLoMo'. The Nike team approached the whole concept from the audience's perspective, identifying functionality that adds real value to runners - from tracking your route to connecting you with other runners, and even letting your friends send you live 'cheers' messages while you're out on the road.
• American Express continues to innovate in the social media space, working with Twitter, Foursquare, Facebook and recently they have teamed up with gaming company Zynga (developers of Farmville). This latest move is a first in the prepaid card market by offering in-game incentives for daily expenditures. The reloadable pre-paid card offers reward users in Farmville cash. This again highlights how American Express is really pushing the boundaries of loyalty from a reward perspective.

Building loyalty at the heart
Brands that have an inherent focus on loyalty from the outset and who strive to create a loyalty ecosystem (such as Apple) are the real pioneers. But should this level of innovation be more about the technology rather than employing advanced techniques, or does the key to success lie in building innovation into business culture? While the technology is an essential component, corporate culture must openly embrace innovation at all levels, along with a strong brand message around the benefits of innovation that will empower staff to produce a more satisfying customer experience. In short, technology has become the key enabler to innovation (i.e. as a platform or mechanism), but innovation should not necessarily be all about the technology itself. Furthermore innovation is not always about being the first or the best; it can be achieved through creating differentiation or improving one aspect of business performance.

Whatever the situation, one thing is clear - if brands do not do the basics really well, then any innovation could be a wasted effort. For example, when Research In Motion's (RIM) servers crashed in October 2011, and millions of Blackberry users were left without email or text services, the last thing on consumers' minds was the company's innovation: their concern immediately came back to the basic element of providing a reliable service.

In today's atmosphere of competitive innovation there is of course a risk that brands will fall behind or even stagnate completely. So, in order for brands to start thinking and acting more innovatively, they should look at what the pioneers and early innovators did right. For example, brand must allow for a customer-centric culture that allows ideas to flow. Brands must also prepare to invest more in innovation while understanding that not all new ideas will produce results, so a results-driven culture is unhelpful to those pushing the boundaries of innovation: a sensible balance must be found between a results-driven focus and an innovation focus.

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