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How to Design Customer Loyalty through Collaboration

National Coffee Day is fast approaching. In honor of this sacred day, coffee retailers like Dunkin’ Donuts, McDonald’s and Krispy Kreme are celebrating by offering customers free or discounted java for a limited time. Also joining the java festivities is Tim Hortons. A smart move at a time when many Canadian customers worry about the future of their beloved coffee-and-donut chain since Burger King’s late August announcement of a merger valued at more than $11 billion.

Deep down, Tim Hortons’ real value isn’t on its menu, in its stock price, or through any tax inversions. It’s in the loyalty of devoted Canadian customers who buy 8 out of 10 cups of coffee from “Timmy’s.”

You can’t buy that kind of loyalty. But, as Burger King has shown us, you can merge with it.

Of course, achieving anything close to Tim Hortons-level loyalty doesn’t happen overnight or merely through one merger. It takes a quality product, an understanding of what customers really want, and, sometimes, creatively simple tactics to reward and encourage repeat business.

When Subway began its ascent up the fast food ladder it came armed with a standout customer loyalty weapon: the Sub Club. For every sandwich purchased, customers earned a stamp. Collect 8 stamps, get a free sub. The system was simple. The value was clear. And earning a stamp felt like an achievement. Eventually, Subway switched their program to the aptly named Subway Card where customers earn points redeemable for subs and other menu items. But the truth is, the Subway Card hasn’t differentiated from the competition, at least not the way the Sub Club of yore did.

The average person is enrolled in 10.4 loyalty programs, each with its own value proposition and definition. The question facing consumers (and brands) is, how are we to determine what programs are worth it, and which are not? Where’s the value? What are the benefits? As Communispace CEO Charles Trevail recently wrote for Fast Company, “earning points does not automatically translate into value for the customer or the brand.”

Loyalty programs designed in collaboration with customers is a smart way to remedy this problem. This is what our client, Global Hotel Alliance (GHA) did. Hundreds of customers, GHA hotel staff, and CEOs came together in an online community and offline workshop sessions to brainstorm and design GHA Discovery, a new kind of hotel loyalty program that fulfills customers’ desires for one-of-a-kind “local experiences” when they stay at one of the more than 450 GHA properties around the world.

According to the GHA website, members can redeem GHA Discovery rewards to “enjoy a flavour of palatial living in Bangalore, bask in the splendor of the Maldives, do business in style in Washington DC or sample the delights of a traditional British afternoon tea.”

The result of this collaboration between GHA and its customers has been tremendous. In the four years since GHA Discovery launched, program membership has skyrocketed to over 4 million members. The program has won several awards. And annual incremental cross-sell revenue between GHA properties as a result of the GHA Discovery program is up more than $17.5 million to date (and by $37 million in 2013).

When customers help you design the programs and experiences they want, their loyalty will follow. Make sure the program is simple, unique, demonstrates clear value, and, above all, delights customers by making them feel they’ve genuinely achieved something for their loyal business.

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