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BizReport : Loyalty Marketing : November 12, 2014

Brands: Why you need engagement-based loyalty

Consumers like loyalty programs, but did you know there is a difference between transactional and engagement-based loyalty programs? One expert believes brands should use engagement-based loyalty systems to tap directly into the opinions and experiences of their customers.

by Kristina Knight

Kristina: How can brands better use engagement based loyalty?

Matt Moog, PowerReviews CEO: The benefits of engagement-based loyalty are two-fold.First, brands can interact with customers who traditionally were anonymous to them, because traditionally retailers owned that relationship. Secondly, once brands start collecting user-generated content from customers, they can syndicate it, providing benefit to and deepening their relationship with retailers. When implemented properly, consumer engagement allows a brand to get close with and engage its most passionate customers, who in turn share that affinity with other communities of consumers.

However, it's also worth nothing that retailers can take advantage of engagement-based loyalty as well, by soliciting ratings and reviews and other types of interaction with its customers. Retailers too can use engagement-based tactics to create advocates who bring their affinity to new communities.

Kristina: Do you foresee a time when most brands are using engagement-based rather than transaction based programs?

Matt: In the past few years, we've seen brands place a stronger emphasis on engaging their customers, so it's no surprise that this principle is being applied to generating brand loyalty.

As consumers continue to become more educated and empowered, it's likely that they will continue to seek out ways to contribute their voices to these conversations and engagement-based loyalty programs are best positioned to take advantage of that. It's hard to say whether transaction-based programs will recede all together, because many companies will likely use both.

Kristina: Is there room for both, if brands have proper strategies for engagement and transaction-based programs?

Matt: If used properly, engagement-based strategies still achieve the same goal as transaction-focused systems - to drive more sales - but do so in a way that also develops brand affinity and promotes advocacy. While transaction-based systems drive a limited number of repeat purchases, the members of brand communities are much more valuable in the long run, not only making repeat purchases themselves but driving referrals through their advocacy.

Image via Shutterstock

Tags: engagement based loyalty strategy, loyalty marketing, loyalty program trends, PowerReviews

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