Anyone who tells you that ‘loyalty’ means ‘a loyalty programme’ has a bit of catching up to do, and while you could argue that in most circumstances in retail true loyalty doesn’t exist, I still maintain that there’s a place for this word in the industry.
It’s never been more important to keep customers coming back, but it’s never been easier to lose them. Current approaches to loyalty are broken and introducing yet another standard loyalty programme won’t fix this. Most traditional loyalty programmes offer an almost entirely transactional value exchange between consumer and brand. In reality, loyalty can be achieved as an outcome of a strong connection between a brand and its consumers, driven by the engagement and interactions that occur.
One facet of this which I focus on in this blog is the notion of lifestyle loyalty – engaging with brands which consumers believe enhance their lifestyle, potentially at significant expense. The loyalty aspect here is driven by how these brands can help the consumers achieve the lifestyle of their dreams, not because there’s any specific (traditional) reward or offer involved.
Veblen and positional goods and services
In economics, are considered as luxury products which cause an increase in demand as the price increases, an apparent contradiction to the law of demand.
Taking this a little further, a product may be classed as a Veblen good because it is a positional good – a good which few others can own, or something exclusive. Positional goods are only deemed as more valuable because of their distribution, rather than by volume. Their perception as status symbols or something which can enhance a person’s lifestyle is what drives their greater value.
Stretching this further, the concept of positional goods can also be applied to services and non-material possessions which could have the effect of altering one’s social status, and which are classed as desirable when enjoyed by fewer people in a population.
Lifestyle brands and their positioning
Fitness and lifestyle brands like For many consumers, it’s a lifestyle they want to chase – if they’re healthier and sexier, they’ll have more friends and will therefore be happier. The models and fitness instructors used on social media and in their advertising are the perfect examples of what can be achieved by being part of it.
I mentioned earlier that positional goods or services can be typified as being desirable when enjoyed by fewer people in a population. In the case of these brands, barriers such as urban-centricity (focusing on cities like London and New York) and relatively high-costs for classes and equipment will make it difficult for many people to be part of these brand experiences.
On a more human and emotional level, however, the fear of the unknown or the right to belong play a part here, as both a hindrance and a help. In some cases, consumers will be put off joining and taking part, because they don’t feel that they ‘fit the mould’ or belong in that environment.
Twitter user @ClueHeywood highlighted in a tongue-in-cheek manner the slight absurdity of some of the advertising in this space, which positions itself as being entirely inaccessible to the majority of people.
On the flip side, however, it’s a help to the brand because it increases the notion of exclusivity for those who are part of the community. The feeling that these brands are contributing to a better lifestyle because of this exclusivity is one way in which it drives loyalty with them.
How this stimulates loyalty
Focusing more closely on what this means for brand loyalty, there are three factors which contribute to this, to varying degrees.
The first relates to the outward-facing image of the lifestyle someone might want to portray to others, through social media for example. Rather shallow and self-gratifying, it’s something that many of us (myself included) are guilty of but which plays a part in how we choose the brands we associate ourselves with.
The second – an internal and more short-term feeling – is the pleasure we get out of a great experience. The physical space enjoyed by members of these brands (waiting areas including smoothie bars and changing rooms with high-quality toiletries), as well as the services on offer and the consistently high quality of instructors and staff members, makes visiting a real pleasure, in comparison to other gyms.
Lastly, and the most emotionally-rooted factor, is the longer-term benefit of feeling better after working out. Exercising increases our heart rate and provides our brain with more oxygen, affecting our overall positivity. We then associate this feeling of health, positivity and truly bettering ourselves with the brand, which increases the likelihood that we will return, as well as our loyalty to the brand.
I’ve listed few example in the health and wellness category, but I wouldn’t be surprised if it’s the reason Selfridges opened a boxing ring in-store and Lululemon has doubled down on in-store yoga and fitness sessions.
What can be learnt is that loyalty isn’t all about points and coupons, although they are important mechanics in driving repeat visits and spend for many retailers.
Loyalty also isn’t always about cost and convenience – customers will go out of their way from a finance, location and even personal perspective, to associate themselves with a brand which they believe can enhance their lifestyle.
Experience is key, and the role of retail spaces needs to change as society and consumer behaviours change. It isn’t just retailers that are retailing, and brands need to redefine their traditional, transactional spaces into experiential destinations.
How you make customers feel is important in creating new ways of building customer lifetime value. It’s important in forming sustainable relationships, where customer loyalty is the hard-won outcome.
We believe there’s an opportunity for brands to think, innovate and behave differently to create new ways of selling products and services, to build new methods of engagement and to create new loyalty models for better, longer-lasting relationships with consumers.
Senior Manager – Inventive Shopping (Capgemini Invent)
Christopher works with retailers to help them better understand and engage with their customers. His experience in omni-channel retailing, digital marketing, Customer Relationship Management (CRM), loyalty and building a single view of the customer enables him to support retail brands on this transformation journey