Fostering Brand Loyalty: The Role of Social Impact in Retail Loyalty Programs
Traditional loyalty programs, primarily offering points, discounts, and rewards, are no longer distinctive, as today’s consumer has an array of shopping alternatives.
Loyalty programs have historically been a critical strategic tool for retailers to encourage repeat purchases and foster customer retention. Their core purpose is to reward loyal customers for their consistent patronage, nurturing a loyal customer base that consistently makes purchases and actively promotes the brand. However, in the face of overwhelming options, a loyalty program must evolve as a differentiator, enabling brands to connect with customers on a deeper, more emotional level to secure long-term loyalty.
Although hard-value rewards such as points, discounts, and free shipping play a role in acquiring customers, they’re increasingly commonplace and fall short of fostering emotional connections with customers. These emotional bonds are vital in establishing enduring loyalty. For these reasons, loyalty programs have been moving towards providing unique or personalised experiential rewards. Such rewards, like exclusive access to product launches or events, personal shopping experiences, or interactive brand engagements, create an emotional resonance with customers.
Taking this evolution further, integrating social impacts into loyalty programs allows brands to form a deeper emotional connection with customers. It allows brands to support a cause or value that resonates with the customer and aligns with the brand ethos, promoting shared values rather than just a product or service.
Integrating social impact into loyalty programs is particularly effective in engaging millennials. This generation is known for its preference for socially conscious brands and active participation in charitable activities, with 84% of millennials contributing to charitable organisations. Millennials are inclined to remain loyal to brands reflecting their values, and loyalty programs that align with social causes not only deepen the emotional bond with these customers but also enhance the brand’s reputation and market position.
An increasing number of businesses are successfully incorporating social impact into their loyalty programs:
The Body Shop: The Body Shop’s “Love Your Body” rewards program encourages members to participate in its refill revolution, offering double points on all refill purchases. This not only incentivises environmentally friendly behaviour but also enhances loyalty by providing additional benefits to members. Moreover, members can donate their rewards to one of The Body Shop’s partner charities, aligning the brand’s social responsibility goals with the personal values of its customers. This creates an emotional connection and loyalty with customers passionate about the same causes.
noissue: This sustainable packaging company has established the Eco-Alliance loyalty program, a model for integrating sustainability with customer loyalty. For every order, noissue plants trees in areas of need, contributing to global reforestation efforts. To date, this initiative has allowed them to plant thousands of trees worldwide, offsetting carbon emissions and supporting diverse ecosystems. As a member, businesses receive an Eco-Alliance badge they can display, acting as a trust signal to eco-conscious customers. This way, the loyalty program doesn’t just incentivise purchases; it makes customers feel they’re part of a movement that aligns with their environmental values.
Qantas: The Qantas Frequent Flyer program introduced a “Green tier” to incentivise and reward members for making eco-friendly choices. Members earn ‘green tier points’ through a variety of sustainable activities such as choosing to fly on Qantas’ carbon offset flights, using an electric Qantas vehicle for travel, or participating in recycling initiatives through the Qantas Future Planet program. This innovative approach to loyalty rewards caters to the growing population of environmentally-conscious consumers and makes Qantas stand out in the competitive airline industry.
AIA Vitality Program: The AIA Vitality Program, a science-backed wellness programme by AIA Insurance, is a pioneering example of promoting social impact through a loyalty program. The program rewards members for making healthier choices, such as undertaking regular exercise, attending health screenings, or maintaining a balanced diet. Incentives include discounts on insurance premiums, gym memberships, and wellness-related products. It motivates positive lifestyle changes, promoting the social impact goal of improving public health.
DSW and Soles4Souls: DSW, through its loyalty program, has partnered with Soles4Souls, a non-profit that turns unwanted shoes and clothing into opportunities. They prevent these items from going to waste and use them to provide relief, create jobs, and empower people to break the cycle of poverty. Soles4Souls has distributed over 73 million pairs of shoes and pieces of clothing in 129 countries since 2006. DSW VIP members can donate a pair of new or lightly worn shoes at any DSW location and earn 50 reward points. In addition, members have the option to donate their VIP rewards to Soles4Souls, contributing further to this social cause.
REI Co-op: REI’s cooperative structure is unique in the retail world, and its loyalty program reflects that. When customers pay $30 for a lifetime membership, REI donates $5 to the REI Cooperative Action Fund, underscoring its commitment to supporting outdoor access for all. In addition, REI credit card holders contribute to the company’s annual $2 million donation to the same fund. This socially-conscious element of their program reflects REI’s mission to foster a love for the outdoors and create a community of outdoor enthusiasts.
Authenticity, consistency, and transparency
Incorporating social impact into loyalty programs requires brands to be authentic and consistent. Transparency in these efforts is key, as customers value genuineness and can sense when brands’ actions are not aligned with their stated values.
Retailers can leverage social responsibility to foster deeper emotional connections with their customers by reflecting their customers’ values through their loyalty programs. In an increasingly competitive retail landscape, loyalty programs that offer more than transactional rewards will lead the way in customer engagement and brand loyalty.
