Why it matters:
- 78.6% of companies surveyed said they are planning to revamp their loyalty programs in the next three years, according to loyalty technology provider Antavo, as experience-based perks versus just discounts gain appeal.
- Sweetgreen is among several brands that have introduced paid loyalty programs to complement free programs, offering rewards such as exclusive access to new menu items to monthly subscribers.
- JetBlue has revamped its TrueBlue loyalty program so that customers can earn experiential perks, like a free in-flight drink and double points for a JetBlue Vacation package, according to spending levels.
Amid ongoing inflation and economic uncertainty, brands need to think differently about how their customers are shopping, and what incentives will work to ensure that they remain loyal customers.
“In today’s economic climate, brands need to remember that consumers aren’t stopping their spending altogether; rather, they’re reprioritizing how and where they spend their money,” said Sean Burke, Partner and Retail Industry Lead at Clarkston Consulting. “As a result, brands also need to reinvent or reprioritize their marketing and retention strategies. What’s worked in the past when it comes to loyalty programs, marketing, or retention efforts isn’t a guarantee.”
Brands are being challenged to make their loyalty rewards stand out more than ever before, and to go beyond trading rewards for spending, he said.
“With any loyalty program, customers expect some sort of reward or perk, of course,” said Burke. “The difference will be providing the better experience, the more premium perks, the deeper discounts.”
He cited some innovative examples of companies and brands taking “personalization, customization, and customer-centric thinking one step further” in their loyalty efforts:
- Hugo Boss is focusing on the customer experience by providing more personalized guidance to loyalty program members. The Hugo Boss Experience includes fashion advice and personal shopping services, in addition to rewards points and early access to products.
- Nike membership includes special offers and early access to products, as well as invitations to exclusive Nike Experiences, such as celebrity meet and greets and community service events, all via the Nike app.
- The North Face’s XPLR Pass rewards program “combines a bit of everything when it comes to the customer experience, but they’re also doing a fantastic job of appealing to their customers’ values and interests,” said Burke. For example, members receive points for bringing their own reusable bag to shop in stores and for using the mobile app to check in at national parks or national monuments.
Recent research from Antavo, a loyalty technology provider, found that companies are counting on their loyalty program to help them navigate a potential economic recession. An increasing number of companies are planning to revamp their loyalty programs, the survey found. While 71.6% of companies surveyed in 2021 said they expected to make significant changes in their loyalty programs, that number increased by 7 percentage points, to 78.6%, in 2022. “Having a great loyalty program is the new norm,” the report concluded.
As a result, brands also need to reinvent or reprioritize their marketing and retention strategies. What’s worked in the past when it comes to loyalty programs, marketing, or retention efforts isn’t a guarantee.
Sean Burke, Partner and Retail Industry Lead, Clarkston Consulting
JetBlue’s revamped loyalty program targets a variety of customers — whether you’re a frequent flier or ‘travel just once a year’
Airlines have long been at the forefront of loyalty innovation, offering “frequent flier” discounts that seek to encourage members to choose one airline over another. JetBlue recently overhauled its TrueBlue loyalty program to include several new features that reflect up-to-date trends in loyalty, such as the ability to personalize rewards and the ability to progress through multiple tiers of membership to earn more and more perks.
The program’s “Mosaic” level of loyalty for elite members remains, but the new program introduces “Tiles,” which are stages of membership that can be accumulated to reach Mosaic status.
“Our new program is designed to appeal to a wide variety of customers, whether you are a Mosaic member or travel just once a year,” said Joanna Geraghty, President and Chief Operating Officer of JetBlue, in a recent earnings call with analysts. “It is a truly differentiated approach to loyalty, as we give more opportunities to all customers to earn rewards faster, drive [participation] through more options and choice, and increase their engagement with the program in TrueBlue.”
A key aspect of the revised program is the ability for members to begin selecting their own rewards at relatively low levels of spending. For $1,000 spent on Jet Blue flights (which earns 10 Tiles), for example, customers can select from perks such as a free in-flight drink, double points for a JetBlue Vacation package, and others. Members continue to select from this list of perks as they reach the 20-, 30-, and 40-Tile levels.
At the 50-Tile level, TrueBlue members enjoy Mosaic elite status, which includes four levels, and perks are enhanced at each level.
[Read: 4 Trend-Driven Ways Brands Are Tapping Personalization for Growth]
Sweetgreen joins the subscription trend with new paid loyalty program
Salad restaurant chain Sweetgreen also recently unveiled a multi-level loyalty program called Sweetpass, in which customers can choose between free and paid versions. The paid version, Sweetpass+, costs $10 per month, for which members receive $3 off daily orders, delivery perks, early access to new menu item drops, exclusive Sweetgreen experiences and access to priority customer support. The free version also includes both experiential rewards and Sweetgreen points, which members can earn by opting to pursue personalized “challenges.”
The new loyalty program coincides with the company’s new online merchandise store called The Market, which offers salad-themed apparel and items such as coffee mugs, keychains, and mousepads. Loyalty program members got early access to the store for a month before the general public.
In a conference call with analysts just a few days after the new loyalty program, Sweetgreen Co-founder and CEO Jonathan Neman said the customer response to both the paid and free loyalty programs was exceeding expectations. He said the programs were expected to drive both traffic and profitability.
“We believe the program will drive margin improvements not only from the underlying membership fees, which come at limited costs, but also through [incremental sales gains] across our customer base,” Neman said.
The two-tiered program was launched nationally in April after research and testing in multiple markets. It replaces a traditional “buy 10 salads, get one free” loyalty program that the company ended in 2020.
Sweetpass+ follows pioneer Amazon Prime, which proved the viability of asking customers to pay for perks, such as free shipping and access to special offers, and a host of other companies have followed suit.
Athletic apparel retailer Lululemon, for example, last year rolled out a two-tier loyalty program. The free loyalty program gives members early access to new products and invitations to local events, while members who pay $39 per month receive a subscription to the company’s at-home fitness program, along with the perks that are available to members of the free program.
[Read: Startups Help Restaurant Takeout Businesses Go Green With Returnable Food Containers]
Businesses from Sephora to Marriott align loyalty programs with brand values
Clarkston Consulting’s Burke cautioned that brands need to ensure that their overall loyalty strategy aligns with their brand’s values and its value proposition. Brands that focus on low prices, for example, might fare better with a loyalty program offering discounts rather than experiential rewards, for example, and vice versa.
“There is no ‘one size fits all,’ but we’ve seen a few loyalty strategies stick out among the rest, mainly for their efforts to keep the customer at the forefront of the program,” he said.
These customer-centric loyalty strategies include:
- Value-based loyalty programs, through which customers can donate a percentages of their purchase to charities or use points to support programs that align with their own values. Examples include Sephora and Marriott Bonvoy. “This is particularly impactful,” said Burke. “Value-based loyalty programs don’t necessarily reward the customer but rather appeal to their personal values.”
- Game-based loyalty programs, which can add excitement and boost engagement, Burke said. “It’s more than just getting a reward for spending cash,” he said. “There’s a level of activity involved that customers are craving as part of the entire purchasing experience.”
- Community or event-driven programs, which can embrace the sense of community brands want their customers to feel and help make the brand a part of a customer’s daily life, Burke said, citing the Lululemon loyalty program as an example.
CO— aims to bring you inspiration from leading respected experts. However, before making any business decision, you should consult a professional who can advise you based on your individual situation.
CO—is committed to helping you start, run and grow your small business. Learn more about the benefits of small business membership in the U.S. Chamber of Commerce, here.
