Creating Mad Loyalty

In 2014, DAVIDsTEA had more than 100 stores and we were experiencing double-digit sales increases. And we had a cult-like following, with passionate customers happily engaging with our tea guides in-store and on social media. But behind the scenes, the board was pushing us to introduce a loyalty program – then, as it is now, a common tool among retailers. Everyone else was doing it, the board claimed. Why weren’t we?

That year, we introduced our Frequent Steeper program – a traditional (and all-too-common) type of “loyalty” program through which consumers could earn points on their purchases in exchange for discounts and special offers. It was a complicated program to manage, and cost the business millions of dollars every year. The only problem? It did absolutely nothing to drive consumer loyalty. That’s because the term loyalty has been bastardized to mean discounts in exchange for data.

The rebate loyalty program is a race to the bottom that devalues your brand, trains your customer to expect discounts and erodes your margin. There must be a better way.

Loyalty is about problem solving

Driving real loyalty is about solving a customer’s problems. And there are three key problems that represent a massive opportunity for brands.

First, trust is at an all-time low. Your telecommunications company, as an example, lures you in with complicated plans – and dings you with hidden fees and surprise charges. Your airline takes your money in advance, and then oversells your flight leaving you stranded. Consumers are wary of a company’s intentions – and rightfully so.

Second, shoppers are time-starved. They don’t want to wait in long lines, browse dozens of aisles or drive out of their way to get to your store. They want what they want when they want it.

And finally, we’ve lost an emotional connection to the brands we buy. Walmart, Target, Canadian Tire, Best Buy, Staples - is there any difference, really? Would you go out of your way to visit one over another?

Loyalty isn’t about a points program – it’s about an emotional bond between the customer and the vendor. To create “mad loyalty”, then, companies need to:

1. Create trust, either through proprietary product or through strong values that permeate the organization and its actions
2. Create convenience, through time savings and ease of use
3.  Create connections, through personalized customer service

Creating trust

A quality proprietary product that solves a need for your customers clearly demonstrates that you’re listening, and that you’re smart, innovative, and someone who understand their needs.

Our most successful tea ever at DAVIDsTEA was called Forever Nuts – there’s a good chance you’ve tried it. It’s made with apple, almond, and a bit of beet root, and it turns pink in your cup. Eight years ago, when we launched Forever Nuts, it felt like a revolution in the world of Earl Grey and Chamomile. Nothing had ever looked or tasted like this before. Customers took notice. They wanted to see what we would come out with next. They trusted us to create amazing teas.

Today’s strongest businesses have also invested in creating proprietary products. Look at brands like Apple or Google – neither of whom has a traditional loyalty program. Or, on a smaller scale, look at S’well, which launched in 2010. They designed a sleek, unique bottle, with the goal of ridding the world of plastic. The company has grown fast, and continues to win over customers.

In the case of S’well, it’s not only a strong product, but strong values, that are driving brand loyalty. Values can include, of course, the more typical altruistic mission of a company – like you’ll find at Patagonia, or Everlane – but values can also include a single-minded focus on quality.

Consider Blue Bottle, a fast-growing coffee chain out of San Francisco with an exceptionally loyal following. Blue Bottle has a promise to only sell coffee less than 48 hours out of the roaster. They have a peak flavour guide, and make recommendations on how many days from roasting each coffee should be brewed for optimal flavour. This unwavering commitment to quality has allowed the brand to thrive in a crowded, mature category.

Creating convenience

The old adage “time is money” has never been more true. Making it easier for your customers to learn about, buy, and use your products can have a lasting impact on customer loyalty. 

Look at Amazon – a brand that has revolutionized their industry by making every step of the buying process easier for its customers. From two-day prime shipping to one click buying, to having all your addresses saved and easy to access, Amazon is, quite simply, world class at not being a pain in the ass. Amazingly, this is still a rarity in retail, and I know it has been one of the main factors of their success.

Imagine if a telecom decided to take the same approach to customer service. Instead of offering the same complicated phone plans, same lengthy setup process, same customer service puzzles, same elevator music (which you listen to while you wait to speak to yet another powerless customer service representative), imagine if a brand focused all their dollars and energy on making the experience easier, faster, and more pleasant. Imagine one-button device set-up, three simple plans to choose from, and a real person – empowered to help you! - at the end of every customer service call. There’s an opportunity for loyalty if I ever heard one.

Creating connections

The most successful policy we ever had at DAVIDsTEA was our store-level empowerment policy. Our tea guides could do whatever they needed to do to make it right for the customer. On the spot. Without a single approval. This policy cost us 0.30% of sales (less than a third of the cost of our loyalty program), and it was one of the biggest drivers of positive customer feedback - and one of the main reasons we were recognized as #1 for customer service in Leger Marketing’s WOW survey.

Disney gets this. I heard just one recent example about a Disney customer service experience that drives this home: a young girl was scheduled to meet with the Disney Princesses – it was the most anticipated moment of the trip. She’s dressed in her very own princess dress, ready to go, and then just moments before the big meeting, she spills something, ruining her dress. Her Dad, in a panic because his daughter is in tears and he doesn’t have enough time to go back to their hotel and get her a new dress, asks a janitor for a cloth. The janitor, though, goes one giant step further. In the same amount of time it would have taken her to clean up, he brings her into the closest gift shop and gets her a replacement dress. The cost to Disney? Less than a hundred dollars. The impact on brand loyalty? Priceless.  

Personalized customer service can be more powerful than any canned loyalty program. Instead of investing in discounts, try investing in the tools your employees need to really meet the needs of your customers. The payoff is real and sustainable.

Improving loyalty requires making investments in areas that have endless payback – quality product, customer convenience and personalized customer service. More than a bunch of points or a discount ever will, these things will help you make a lasting emotional connection with your consumers. That’s real loyalty.  

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