When you consider that less than 5% of customers can generate a brand’s online word of mouthcreating a business strategy that focuses on building a loyal community of the people who love you most makes a lot of sense. 

It’s expensive to acquire customers, especially when they might not stick around. Mack Collier (@mackcollier) says rock stars make the best marketers exactly for this reason: they focus their efforts and budget on strengthening relationships with existing fans, not spending money on acquiring new ones.

So if investing in the people most passionate about you is a smart play that makes business sense, why don’t more business owners take heed and follow suit?

Can money buy your business love?

We know earning loyalty, trust, and relationships are hard work, but it pays. We’ve known this for a long time. Crank up the ‘way-back’ machine and you’ll find the article E-Loyalty: The Secret Weapon to Success published by the Harvard Business Review in 2000 stating that just a 5% in increase in customer retention can increase profits by up to 95%. And their findings were based on research from ten years earlier in 1990!

But outside of the known success stories, more often than not, loyalty programs fizzle out after the first 24 months. In the US alone, companies spent a staggering 2 billion per year on loyalty programs. But do the programs lead to increased engagement, stronger sentiment, wild word of mouth, or…love?

According to Cap Gemini, not really. Here are some of the highlights (there are even more jarring stats in the report)

  • 16% of the programs rewarded customers for activities such as taking online surveys, rating and reviewing or referring friends to the program
  • Just 25% of companies reward loyalty program members based on non-purchase interactions
  • 89% of social media sentiment on loyalty programs was negative
  • More than half of consumers surveyed admitted to abandoning a loyalty 24 months after joining

A 50/50 chance your customers will jump ship?! Good luck selling that to management!

Loyalty, but first community

So what is loyalty? How can you foster feelings of belonging? What do people really want from you?

As companies shift to customer-activated, brand communities are climbing the ranks as sustainable, affordable and valuable long-term to retaining customers and increasing advocacy.

To understand how to create value, you need to define value for the group of people you’re aiming to connect with. This goes back to Mack and his rock star theory; rock stars know their value and they know where they fit in their audience’s life, and vice versa.  The good news is, businesses are beginning to understand this as well.

According to the 2016 State of Community Management Survey, 60% of participants can define the value of their community for their organization, and a slightly larger percentage say they can define the value for members.

So what are people are looking? A seat around the table. An invitation to participate. The inspiration to join the conversation. The ability to shape change.

A story about red-eye and hands-on learning

In 2012, I was head of community for Paper.li. To better understand our how we could connect with our community, I was researching two options: a loyalty program and community strategy.

I did my research for loyalty programs. It took two weeks and it was cut and dry: Interviews, phone calls, and reading.

I did my community building research and it took six months and gave me red-eyes every Monday morning — and I loved it. Here’s what I learned.

For months,  I lurked, listened, and participated in Tweetchats to meet our end-users on neutral turf. I sponsored tweetchats to learn more about the impact of brand sponsorship on community. For five weeks, I woke up at 2:00 am Swiss time Monday mornings to participate in #blogcat at 8pm Central Sunday.

After each #blogchat, I’d re-connect with participants, thank them, write a follow up on G+, then a blog post and then crawl into the office at 8:30am for a debrief, process mapping community structuring session.

My takeaways:

  1. Researching loyalty programs was a heck of a lot easier than community research, but…
  2. Why was I researching loyalty programs when through community building I could hit so many stones, so to speak, for our company? Building loyalty, spread word-of-mouth, helping with end-user acquisition, co-developing product features, improving support customer care — and all at a fraction of the cost!
  3. The red-eye was brutal, but the learning was worth it. If you want to build loyalty, it’s going to come community first and that means earning trust, hands-on and with hard work. 

I think Mack is right. Rockstars do make darn good marketers. And when it comes to loyalty —  money can’t buy you love but community can get you very close.

By: Kelly Hungerford

Kelly Hungerford is a featured guest contributor and is a Sr. Digital & Social Media Strategist

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Kelly Hungerford is a featured guest contributor and is a Sr. Digital & Social Media Strategist

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