Loyalty Truth

There’s a quirky online e-tailer named Fab that’s taking a unique approach to building their customer base. They’re relying almost solely on word-of-mouth through social media, including Twitter, Facebook and Pinterest, to both grow sales and encourage customer engagement.

The thinking behind Fab is different from virtually every other online retailer. For starters, you have to “join” Fab as a member to gain entry to the site. Then, once you’re on board, you can invite your friends to join in exchange for a nice commission. You receive a $30 credit for getting 10 new members to join, and a $25 credit if your referral makes a $25 purchase within 30 days of joining.

The site is well-designed, clean and simple, but its real beauty is the way it has integrated social media into its DNA in order to keep its members active and engaged. There are ubiquitous social media links around most product pages, as well as omnipresent ad banners inviting users to “Shop with Facebook friends”. There’s a “Live Feed” page that connects customers and lets you peek in on who is buying and “faving” what.

So far, this unique marketing scheme appears to be working. Fab opened for business just last year and already has 4.5 million members and is generating $400,000 in sales each day. And they’re doing it without any advertising and without any discernible brand voice.

This got me thinking: is community the new loyalty?

In my days at pioneering loyalty marketing shop Frequency Marketing, we talked about loyalty in terms of reward and recognition. Reward usually involved a points-based program that got customers to stick around for a tangible payoff once they reached a preset spending level, while recognition involved soft benefits like complimentary upgrades or services.

But in the digital age, that feels more and more like a limited approach. As best I can tell, Fab has no loyalty program. Their brand voice is muted at best. And while it does offer a “cool” and diverse product line, there are dozens of other e-tailers doing the same the thing. (For starters, check out The Real Real, Uniqlo or Styloko)

I believe that Fab’s social shopping model could be on the leading edge of a new way to gain customer loyalty that’s based not on your relationship with the brand itself—but on the relationship you have with the brand’s community. On Fab, that’s the friends and acquaintances with whom you share links about what’s cool and what’s not.

The fact is no matter how compelling your brand story might be, a consumer is still more likely to relate and bond with like-minded shoppers, who share their whims, desires and tastes. Bring enough of these shoppers together in a community, and you could have a force more powerfully able to retain customers and increase customer spend than even the savviest loyalty program.

What do you think?