Loyalty Truth

Three men walk into a bar. Sorry, that’s the lead-in to an old Irish joke. In this case, three practitioners of Loyalty Marketing (people who actually create brand loyalty for a living) are on their way to a Florida Marlins game after the conclusion of Loyalty Expo 2009.

Having no idea of the conversation that would ensue, I commented that I did something surprising the weekend before, pay a $25 membership fee to join the Barnes & Noble Member Program. “I got half the annual fee back in one purchase” was my justification.  I also knew that with purchases pending to buy the kid’s summer reading books,  it wouldn’t be long before I recovered the entire fee. Add to that the convenient location of B&N to my house and it was an easy decision.

My friend riding shotgun retorted, “I’d never pay a fee because Borders lets you register for free and I can wait for those 40% off coupons they send by email”.

Not to be left out, our backseat companion added “I always buy my books from Amazon because they have the best prices, but I always wait until my order is big enough to get the free shipping“.

Suddenly we had a mini-focus group at work in a car full of Bibliophiles. Who knew that Loyalty Marketers were such avid readers? More importantly, I realized just how challenging it is to create a value proposition that attracts a wide enough audience to make inroads into competitive offers.  We had three examples right before us, each with an instructive lesson about consumer purchase behavior:

• The straightforward “pay now and recover as you shop” approach from B&N is sure to attract a self-selecting crowd, but does it shift share once the fee is earned back?
• Borders makes it easy for anyone to play, but numbs its membership with a repetitive cycle of discounts and sales that train customers to wait for the one they like best.
• Amazon builds on a low-price model with benefits like free shipping, but will share shift occur when these perks aren’t available?

Each of these strategies has its limitations and there is one common element missing from each program – Participation. My quick take on the Participatory Marketing value chain leads off with Awareness, creates Engagement, and leverages Word of Mouth and Viral effects to create Community and ultimately long term Loyalty.

I may not have these elements in just the right order and possibly abused some buzzwords, but its clear that each of the booksellers that were the talk of the evening needs to take a step beyond promotion and introduce mechanisms for customers to stay with them in between purchases and when the optimal deal is not front and center.

How do you buy books and from whom? Do any of these programs stand out for you, and why?