Guest Post: Hard and Soft Benefits: How Loyalty Marketers Can Create the Ideal Blend

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Indigo, Phaedra Hise, LoyaltyOne, COLLOQUY, Canada, Customer, Marketers, Loyalty

Of the 33.5 million citizens of Canada, more than 5 million belong to a loyalty rewards program operated by a single bookstore chain. That level of market penetration results from a unique package of benefits that responds to the challenges of the digital revolution that’s transforming the book-buying market.

Indigo Books & Music is Canada’s largest bookstore chain, with 97 superstores and 132 small-format stores. In a crowded retail space, Indigo's differentiating factor is careful attention to a classic loyalty tenet — the balance of hard and soft benefits.

Indigo recognized the need to provide customers what online competitors couldn’t: a loyalty program with a powerful mix of hard benefits (including points and discounts) and soft benefits (such as personalized experiences and special-event access).

“We knew that simply offering more hard benefits in the form of points or price discounts would not be enough to inspire true customer loyalty,” says Elizabeth Gladney, Indigo’s Director of Marketing. “Customers wanted — and expected — much more.”

Indigo expanded its hard benefits to offer points for both book and non-book purchases. But the soft benefits drive the program’s success, especially as they touch areas that pure cyber-competitors such as Amazon haven’t explored. The emotional bonds created by these soft benefits underpin the success of every long-term relationship.

Personalization

Indigo developed a program feature called MyRecommendations, which guides customers to specific purchase decisions through customized suggestions. These weekly e-mail recommendations are based on granular data reflecting the individual customers’ purchases, stated preferences, browse history on the Indigo website, and community activity.

Gladney states, “To date, more than 70% of our members have received recommendations from us, with open rates exceeding mass email communications by more than double.”

Special Events

Indigo leverages its bricks-and-mortar advantage by offering local special events such as art gallery visits, ballet performances and special access to best-selling authors.

Once-in-a lifetime contest experiences have included:

  • Tickets to the prestigious Governor General’s Literary Awards Dinner with Canada’s most successful and respected authors
  • An eight-day trip for two to Russia to celebrate the release of the movie Anna Karenina
  • Visiting Indigo’s head office in Toronto to preview product lines before they hit the stores

Gladney says, “The open rates on event and contest invitations index very high — some reaching up to 36% — and we’ve seen over 20,000 entries for some of our exclusives.”

Social Media

Indigo constantly reviews social media platforms to determine new ways to engage members as they earn more points. For example, Indigo incorporated gaming into its social media platform with a temporary incentive enabling members to earn points more rapidly via Indigo's Facebook page.

Indigo’s first-year target was to acquire 1.9 million rewards members. In reality, the program jumped off the charts, signing more than 4 million members and currently has 5.5 million cardholders. Members spend more on a greater range of products than non-members, and demonstrate greater response and engagement levels.

Indigo’s experience reinforces the need for loyalty marketers to offer a value proposition that blends the right mix of hard and soft benefits. Among the lessons:

  • Customers of loyalty programs respond enthusiastically to offerings that provide financial incentives but also deliver emotional experiences that recognize their specific interests.
  • Transactional data from target customer segments is key to developing and delivering unique and personalized communications that achieve high response levels.
  • Free rewards programs tend to appeal to a different demographic than fee-based programs, and can be helpful in marketing a broader range of high-margin product categories.

Through its use of experiential rewards and once-in-a-lifetime opportunities, Indigo has created and implemented a best practice in customer engagement. And based on customer response, Indigo can’t get much better reviews than that.

Indigo, Phaedra Hise, LoyaltyOne, COLLOQUY, Canada, Customer, Marketers, LoyaltyThis guest post comes courtesy of Phaedra Hise, Editorial Director at LoyaltyOne – a consultancy group that specialises in finding out the facts about customer loyalty.

You can meet members from LoyaltyOne at this year's Europe's Customer Festival and at America's Customer Festival, LoyatlyOne's Bryan Pearson will be speaking.

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