Escaping the Program Trap: How to Build Brand Loyalty That Lasts

By James Lanyon, EVP of Strategy + Innovation at Material

Are your customers loyal to your brand? Or just your rewards?

If you’re only rewarding transactions, that’s all you’ll drive. You’ll only train your customers to interact with you when there’s a sale or discount involved. We call this the “program trap.”

True Loyalty requires more than transactions. Before purchases, customers have already considered your brand reputation and how you align with their behaviors and needs. After transactions, post-purchase engagement and programmatic excellence are crucial to retention.

And if your loyalty efforts are only creating transactions – heavily discounted ones at that – you’re not setting up your program for long-term success. Loyalty points, discounts and freebies add red to your ledgers – as does the need to incrementally increase rewards to keep customers engaged, alongside operating costs like technology, marketing, admin and customer service.

Escaping this program trap requires an organization-wide customer retention effort that goes beyond transaction-driven points and discounts. You’ll need to:

• Discover new and evolving frameworks.
  Having a rewards program in market is just step one. There are models that can guide your program past this initial state into maturity. Material’s frameworks leverage deep experience building loyalty programs, expertise in behavioral science and innovative approaches to experience design – all to guide clients through the execution and evolution of their loyalty program.

• Tie retention to a modern brand strategy.
  Brand matters more than ever. But in a landscape of overwhelming customer choice and shifting behavior, identifying the real drivers of brand strength and value can be a significant challenge. Marketers need to understand consumers’ relationships with their brand to determine the actions that will strengthen connection and fuel retention.

• Understand consumer behavior.
  Embrace the notion that human behavior is your greatest advantage – if you understand it. Behavioral research can go a long way to unpacking the motives, needs, preferences and behaviors of your customers: the rewards and interactions that they respond to, and the ones that make them loyal evangelists for your products, programs and brand.

Escaping the Program Trap

Driving long-term retention and true loyalty takes more than a cookie-cutter rewards program. Let’s look at how investment in these three areas can solve common loyalty challenges, starting with new and evolving frameworks.

1.     Discover and implement new + evolving frameworks

Programs cannot thrive if they’re built on an ineffective framework, or a model that doesn’t look past short-term wins. An effective rewards program framework needs a clear purpose, long-term financial vision and organizational buy-in.

The Challenge: Most programs start on a spreadsheet

The first and most predictable challenge that typically steers programs towards commoditization is that they’re approached as financial and technical challenges. Your customers need you to take a customer-first approach.

The Solution: Co-create your loyalty solution

Material works with clients to make sure customers’ or program prospects’ wants and needs are baked in from the start. We scale these engagements all the way from agile (rapid qualitative inputs) to enterprise (global segmentation studies). What’s most important is how your program structure, value proposition and roadmap are based on real customer needs – not just what you feel you can afford to offer.

The Challenge: Lack of clarity around long-term ROI

Many organizations fail to define their program’s long-term purpose or set realistic ROI expectations, focusing on costs or short-term returns, rather than the financial payoff of increasing customers’ lifetime value.

The Solution: A maturity framework

Frameworks like Material’s Loyalty Maturity Model enable structured long-term planning. Leadership must prioritize a long-term view, allowing programs and customer relationships to mature based on natural customer behavior and intuitive benchmarks your customers want to achieve.

2.     Differentiate your brand and build emotional value

Your offering should be unique and exclusive, moving beyond price to connect with members’ emotions and values. This starts at the brand level.

The Challenge: Loyalty to your discounts, not your brand

Rewards that focus only on transactions don’t build an emotional connection. This trains customers to be loyal to the discount – anybody’s discount – not your brand, product or company.

The Solution: Reward more than transactions

Your program should reflect your brand’s identity and cater to consumers’ individual needs and preferences. Reward non-transactional activity, such as leaving reviews or interacting on social networks, to build emotional connections and create brand evangelists.

Don’t just give discounts, offer experiential value. Providing experiential rewards and special, members-only offers both leverages and reinforces the value of your brand’s people and processes. Experiential rewards can increase trust by pulling back the curtain and showing program members how your brand really works.

The Challenge: Undifferentiated, disconnected programs

Rewards programs are too often taken to market too quickly without enough differentiation or strategy behind them. They don’t adequately represent, much less expand, the brand, leading to mediocre experiences and results.

The Solution: Brand alignment

Material’s Brand Fidelity system can track brand performance across both in-the-moment interactions and long-term experiences. With predictive analytics and forecasting, it can help you uncover how and when to best fit a loyalty program into your brand ecosystem.

3.     Understand consumer behavior

One-size-fits-all programs that don’t fully connect with your customers won’t create the long-term engagement you’re looking for.

The Challenge: Confusion + apathy

Confusion and apathy are deadly to rewards programs. Overly complex rules, clunky sign-up processes, a lack of clarity about points or rewards – all these pain points can confuse consumers and stop engagement in its tracks. It’s possible to keep onboarding new loyalty members and assume the program is doing just fine – but if they all fall by the wayside, their lifetime value won’t increase, and your program will be a wash at best.

The Solution: Bring behavioral science into your program

Your program needs to resonate with your customers. This means it needs to suit their interests, align with their motivations and offer genuine value beyond the transaction.

Applying behavioral science can help you understand your customers better – what motivates them, what rewards they’ll find meaningful and how they want to interact with your brand.

At Material, we use the BASE framework (Belonging, Appeal, Security and Exploration) to decode consumer motivations and design strategic programs that align with human needs, instincts and emotional drivers.

Escape the Program Trap. Build True Loyalty with Material.

If you’re ready to move from program-focused loyalty to an approach that goes beyond points and discounts, then you’re ready for Material’s True Loyalty. We can help you reimagine your loyalty efforts to drive long-term customer relationships and increase customer lifetime value.

Brands like Starbucks, Target, Keurig, Cinemark, State Farm, Sephora and more have already trusted Material to transform their loyalty programs beyond the transactional. We’re ready to bring our deep expertise in behavioral science, brand strategy, experience design and consumer insights to bear on your loyalty challenges. Reach out today.