Many companies in Israel have launched loyalty programs in recent years, but only a few have connected their ESG (environmental, social, governance) values and initiatives to the programs.
Corporations from a wide range of industries are investing in a variety of ESG initiatives to reduce their environmental impact, better serve communities and adopt best practice corporate governance policies. However, few consumers are aware of all the good that community giving programs achieve. A survey conducted on the subject found that 64.4% of consumers do not know the term ESG – a surprising figure considering the large sums that brands in the world donate to non-profit organizations every year.
How can brands engage their customers in their ESG initiatives and demonstrate their commitment to social programs of community giving, if their customers are not aware of these programs?
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Integration of values in the loyalty program
There are few organizations that do not deal with strengthening the loyalty of their customers, but when we come to review the loyalty programs in the organization, most of them are based on transactions, and nothing more. In the past, loyalty design was based on the idea that the shared value with the customer is funded by immediate purchase transactions. While this philosophy ensures that the organization does not risk sharing value with customers, without creating value for themselves – it also severely limits the scope of loyalty program design. The time has come for 2023 to have more loyalty programs that also link the values that lead the company and its actions on the subject.
Contemporary customer loyalty allows you to associate a purchase with a customer’s lifetime value. In practice, this is a transition from a short-term perspective, according to which making a purchase is the way to accumulate points, to a long-term concept that will stimulate certain behaviors – and create benefits to the bottom line over time. To achieve this vision, what is needed is a clear understanding of how customer behaviors and choices create value with reasonable probability. This understanding will not only expand the design space of customer behaviors, but allows a more complete picture of the value of contemporary loyalty to be drawn – thus legitimizing greater investment than in traditional loyalty programs.
Customers spend more on a brand they are loyal to
Customers will remain loyal to the brand to the extent that it represents values similar to their own. A survey conducted on the customer journey found that brands can gain even more loyalty from customers when they support community causes, offer environmentally friendly products or have a strong ESG policy. Such programs have proven to influence brand loyalty across generations from Millennials (65%) to Baby Boomers (49%). An amazing figure reveals that 43% of customers spend more on a brand they are loyal to than on competing brands, so it’s clear that living by the values not only builds trust – but can also create customers for life.
Thus, hiking gear brand Patagonia chooses to close its retail stores on Black Friday so employees can spend time outside. The company donated $10 million earned from retail and online sales over the Black Friday weekend to nonprofits working to protect the environment for future generations as part of its pledge to support sustainability and the environment. Patagonia’s values are embedded in its brand, which gives the company a very loyal fan base.
The green plan (which you don’t have yet)
Sustainability is a way of life and production that simultaneously satisfies human needs while promoting the health of our environment. As the saying goes, Reduce, Reuse, Recycle. Sustainability is important in all aspects of life, but studies show that it is especially necessary in the fashion, beauty and jewelry industries.
It is clear that companies have an obligation to reduce their footprint, and consumers are demanding it. One way to demonstrate this commitment and build customer relationships at the same time is through a green loyalty program. A green rewards program can incorporate eco-friendly features, such as recycling old electronics or donating them to charity for good karma. As such, a green loyalty program builds emotional loyalty and brand advocacy, which builds customer interest, and helps the planet at the same time.
A green loyalty program has many benefits. When customers can donate clothes for a reward, they will have to come into the store. This encourages them to shop and use their rewards instead. When you join a nonprofit or environmental organization, you can get attention from their followers and grow your community, and when you encourage customers to return used products for reuse, you can cut costs. Increasing sales, increasing the community and reducing costs – what more can you ask for from a loyalty program?
Collaborations to increase impact
The first step in the journey is for Customer Loyalty Managers and ESG Community Giving Managers to come together and collaborate, to leverage their brand’s hidden asset to deliver both improved social impact and better business impact.
The journey begins by discussing some key questions to connect the brand’s community giving program with an effective loyalty donation program: How to align community giving priorities with brand values? What’s a creative approach to establish a simple method for your customers to earn your giving coin, as well as a simple way to “donate” your given coin to a branded community cause? How best to design and manage giving campaigns on issues while they are relevant and meaningful to customers?
The members of the loyalty program should have a role to make giving a meaningful experience. The Giving Currency can be earned separately or in combination with the Loyalty Currency to reward members with preferred access, discounts on products or services, free products or other loyalty rewards.
Giving Coin can be earned through an in-store or online shopping experience, or as Adidas did, which linked its Giving Coin to encourage its loyalty program customers to “Run for the Ocean”, and measure the number of minutes they ran for the goal – and then convert the hours into dollars for the charities of their choice . Corporate giving programs donate billions to nonprofits. Consumers care deeply about a brand’s purpose and how the brand contributes meaningfully to making the world a better place. It’s entirely up to us to spread the good news and connect the programs of community giving and brand loyalty with the promise of both social impact – and delivering improved bottom line results for society.
Yael Kander is the director of BDO Digital