Branding and brand loyalty programs are not just marketing gimmicks. They resonate powerfully with deep needs and preferences in the human psyche. That's why they can be traced back almost as far as the origins of manufacturing and trade, and why they are going like gang-busters today.
In 2005, for example, nearly 7 out of 10 U.S. credit cardholders had signed up for some kind of rewards program, and in 2006, Jupiter Research found more than 75 percent of U.S. consumers admitted to using loyalty cards -- about a third of them used more than one. Not surprisingly, U.S. business spending on loyalty programs has been above $1 billion dollars, a number that's been rising for the past several years.
"Again and again," says Tara Lamberson, VP marketing & strategy with MindComet, "we find that -- for many organizations -- loyalty and retention marketing is a hidden gold mine."
In fact, reports Sharon Avery, VP of marketing services with Kobie Marketing, "One of the things that happens when the economy goes south is that spending on loyalty programs goes north."
With continuing development, loyalty programs are likely to become ever more important for maintaining the value of a brand.
A brief history of brand loyalty programs
Hundreds of years ago, manufacturers of durable merchandise understood the value of establishing their brands and building customer loyalty, but they had only rudimentary methods available to them. So in addition to controlling product quality, they intentionally built in conspicuous characteristics, such as weaving textiles with unique colors or unmistakable patterns, or producing fine Damascus swords with a distinctive swirling pattern forged into the blade.
These highly visible characteristics were essentially "branding messages." Instantly recognizable, they allowed manufacturers to "communicate" with consumers, no matter how many intermediaries intervened. Customers learned to rely on this information to help choose their purchases -- an early form of brand loyalty.
Today, of course, notions of branding and brand loyalty are vastly more sophisticated.
For example, Kobie's Sharon Avery views the process of retaining customers as one that's "driven by engagement across as many facets of the loyalty program as possible. So it's not merely how many points your members have in a points-based program, or how many members are visiting the website in an online program, but all the different ways you can get your members to engage with the program, whether that's filling out an online survey, participating in an option or completing their profiles and giving you more information about themselves."
In the online world, particularly, marketers are thinking far beyond the intrinsic characteristics of their product or service -- beyond even consumers' perceptions of that product or service -- and are making loyalty programs an integral part of everyday consumer habits and behaviors.
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