What if there were a way to engage your most avid clients or customers without creating a loyalty program? And if not loyalty programs, why should companies consider investing in the “experience economy”?

The Problem with Loyalty Programs

Loyalty programs certainly have their place in marketing, but they also come with an intense amount of infrastructure build and support, as well as maintenance to ensure the incentives remain attractive, and retention work to ensure that the consumers or clients who were once loyal haven’t fallen off the map. Companies in a B2B or corporate space that do not have access to the same consumer incentives may also find that traditional loyalty and tier-based spending programs do not, or cannot work, as intended for them.

A two-fold misconception that drives a lot of companies to develop ineffective loyalty programs is that 1.) the most valuable customers are the ones who spend the most money and 2.) Loyalty programs are best executed when they give a monetary or product-based incentive. This can derail effective loyalty-building efforts in a number of ways, but chiefly, it might cause you to misidentify your most valuable customers, and offer them an incentive that doesn’t build any good will. By devising programs that only capture high spenders, you actively neglect well-connected and influential consumers who have incredible referral capabilities. And by comping a product disproportionate to their value to the brand, it’s a lackluster, lukewarm incentive at best.

Retention makes an impact, but how much of one? 

Customer retention and loyalty define and will alter business outcomes. Hubspot, a leader in customer management, says, it’s easier and more cost-effective to retain customers than to acquire new ones, returning customers spend more and buy more often, and refer friends and family at higher rates. Harvard Business Review estimates that a 5% increase in customer retention can increase company revenue by 25-95%. So yes, it’s pretty important to the bottom line to keep existing customers engaged, happy, and incentivized to stay. So if now through loyalty programs, then how?

Consider Experiential Marketing for Loyalty Instead

A recent report called “Loyalty Deciphered – How Emotions Drive Genuine Engagement” found that 82% of consumers with high emotional engagement would always buy the brand they are loyal to when making purchasing decisions, while 70% are willing to spend up to twice as much with those brands. And what’s the best way to drive emotional engagement? Experiences. 

Experiential marketing is what all good campaigns and events strive to be: customer-centric. Experiences give a tactile glimpse into the brand, the people who make it up, and the feeling of camaraderie working with them. Events build feelings of appreciation, foster coveted exclusivity and FOMO, and are invite-only which allows you to tailor based on needs and desired business outcomes. Experiences and events build lasting impressions, instant emotional connections, develop real-time data and product/service familiarity, and offer precious face time with important consumers. This is why so many launches, conferences, and insider events happen in-person instead of virtually--the value and impressions made in real time during a curated and planned event is impossible to replicate and deliver online. However, in a world where the in-person is instantly translated online through Instagram, Snapchat, and other live storytelling features, experiential marketing offers a 2-in-1 solution to engaging and promoting. It allows your most valuable clients to experience the “real deal”, while they promote it to their audiences to share what it “could be”. VIP events, conferences, expanded holiday parties, expos, industry pop-ups, and invite-only demos to product or service launches could take your loyalty to the next level.

While loyalty programs may be a fit in some consumer spaces, they are not the only way to build and codify consumer value. Experiential marketing is another effective tool to consider to develop continued consumer affinity and build increased client retention rates.