Fundamentals of modern loyalty

To earn customer loyalty, offer community, not rewards

The irony of most of today’s customer loyalty programs is that they aren’t about loyalty at all. They have more to do with an economic transaction than with true affinity for a brand. For example: some companies allow you to earn points for following them or writing a product review. This sort of bribery usually attracts the least loyal and least valuable audience — people mostly interested in claiming the reward not invested in the brand.

True loyalty is emotional and irrational and leads to customers feeling like they’re part of an exclusive membership group which then leads them to become loyal subscribers or consumer network participants. People appreciate being part of a club — and feel badly when they’re not. Consider, for example, sneakerheads waiting in line all night to score a coveted item. They don’t do it to make money on resale; they do it for the in-crowd bragging rights. And think of everyone who has a hard time canceling their overpriced and underutilized fitness club memberships; as I myself can attest, leaving those communities can be hard.

Membership represents a shift from buying goods in the hopes that others will admire them and you (conspicuous consumption) to investing in oneself: access, belonging, taste, experience, privacy, knowledge, self-actualization. In…