Perhaps the most significant effect that social media has had on middle market companies is that it has vastly improved the ability of these firms to compete with much larger competitors. With a smart, steady social media presence that adapts to what customers and prospects are saying about their needs and desires, a middle market company can raise its visibility and become a go-to player in its industry. A firm can maintain that position through brand loyalty programs that reward fans for their social media activity that involves the brand, creating a virtuous cycle that benefits the firm and its dedicated customers.
It's not to say that midsized firms will have the social realm all to themselves. The largest competitors in a niche can counter with social media rewards programs that offer coupons and other types of discounts on purchases in order to draw people into their social media environment, even if that environment is less robust than what a middle market firm can offer. Midsized companies, however, shouldn't emulate a discount-focused program for a few key reasons:
- Giving away coupons/discounts takes away money off the top line and cancels out revenue generated from effective social media usage (although one-time coupons to entice new customers are an exception here)
- Discount coupons may diminish the value proposition of a brand's products in the eyes of customers (i.e., how much can a product be worth if you can get it for cheap in return for simple social media action?)
- Customers may take advantage of a brand loyalty program, but this doesn't necessarily show actual loyalty to the particular brand (they could be using multiple rewards programs simply to be opportunistic and save money)
When a firm's program is rewarding customers who aren't interested in being loyal and more intent on getting a good deal, the program produces unnecessary waste. In fact, any social media strategy that does not require some useful information from the customer in return for any perks is deficient from the outset.
On the flip side, there are a couple of alternative formats that do away with discount coupons and their negative effects while rewarding true brand loyalty among customers who interact with a firm's social media initiatives for the best reasons. With larger companies already using social media and discount-driven customer rewards programs, midmarket firms have the capabilities to attract customer loyalty in a slightly different fashion. Here are two potential ways in which companies can leverage social media on top of existing programs to gain customer loyalty.
Tiered System
With a tiered system, customers reach increasingly exclusive levels of loyalty that grant them access to special offerings which, because of the amount of data the brand can collect from them after a certain length of time, become more narrowly tailored to their preferences. By gathering sufficient data through customers' social media activity, brands can offer specific reward options that will encourage desired social media behavior and ideally draw a higher amount of spending from loyal customers within a midmarket firm's particular niche.
In essence, these are thank-you gestures that become more meaningful as a brand-customer relationship continues. In addition to the various products made available once a new tier is reached, the rewards can take more creative forms in the areas of services and experiences.
Trek Bicycle Corporation provides an example of a tiered loyalty program that benefits the company and the customer. The middle market cycling manufacturer is headed by CEO John Burke, whose father cofounded the company in the '70s (Burke was interviewed extensively for an NCMM-sponsored Economist Intelligence Unit report). Trek offers all customers a Trek Care loyalty and warranty package when they buy a new Trek bike, but cyclists can take coverage to the next level by purchasing the Trek Care Plus package. Customers pay extra to receive extended coverage on elements of bike repair that aren't covered in the regular plan (including wear and tear and accidental-damage coverage). The company benefits from charging an extra fee on top of a bike sale while also driving customers back to their business for extended repair coverage.
A tiered system similar to Trek's could easily take on an aspect driven by social media. Customers who pay for the Trek Care Plus package can be given exclusive access to a Facebook page, for example, where they could share cycling stories and talk about their service experiences with Trek. The cycling company might even encourage social media action by giving away free repairs for a widely read post. By tying in benefits with social media usage, companies can better stay at the forefront of consumers' minds.
Raw Points System
With a raw points system, brands can drive desired social media behaviors with the goals of brand promotion and data collection while maintaining their products' perceived value. Customers can earn points not only by buying products but by interacting with a company through various social media avenues. This can involve sharing company-related content on Facebook, Instagram, and other platforms. This sort of approach will deter opportunistic consumers focused mainly on getting deals and instead will build a more widespread social network made up of genuine champions of the brand.
For instance, midmarket restaurant chain Boloco uses a card that builds up points to track purchases, eventually offering free items after a customer has reached a threshold of points earned. Sometimes a simple rewards program is best, and Boloco's system encourages customers to keep coming back to their restaurant with the prospect of getting free food down the line.
Just as tiered systems can work hand in hand with social media, raw points can be applied to social action as well. Using Boloco's example, customers could gain points on their card by posting on any Boloco-owned social media platforms. The company might offer further encouragement for its fans to get on Facebook or Twitter by giving away more points for posting than for buying a burrito. Either action will nudge customers back toward Boloco in the future.
Should rewards programs in general be focused more on obtaining new customers or holding on to old ones? Let us know what you think by commenting below.
Rob Carey is an NCMM contributor and a features writer who has focused on the business-to-business niche since 1992. He spent his first 15 years at Nielsen Business Media, rising from editorial intern to editorial director. Since then, he has been the principal of New York-based Meetings & Hospitality Insight, working with large hospitality brands in addition to various media outlets.