Cause Marketing Engenders Loyalty

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On the surface, U.S. customer loyalty programs seem to be on a sharp upswing, with memberships growing an average of 26.7 percent since 2010, according to the 2013 Loyalty Census conducted by research firm Colloquy. Last year, Americans had a collective total of 2.65 billion memberships, with each household participating in an average of 21.9 programs, up from 18.4 in 2010.

But loyalty programs are struggling. Of the 21.9 memberships per household, only 9.5 have seen any activity, defined as at least one engagement, in the past year. That's a 4.3 percent drop since 2010, according to the research.

As marketers look to reverse this trend, some brands have latched onto what that they hope will become a dominant driver in purchase decisions and brand loyalty. That hook is cause marketing, which, according to the 2013 Sponsorship Report from IEG, could reach $1.78 billion by the end of 2013, an increase of 4.8 percent from 2012.

So far, consumers are responding to the brands involved with increased loyalty and purchasing power. In fact, 91 percent of global consumers indicated a likelihood to switch to brands associated with a good cause, given comparable price and quality, a recent Cone Communications/Echo Global CSR Study showed. Fifty percent of consumers would be willing to reward such companies by paying more for their goods and services, according to Nielsen's "2013 Consumers Who Care" study.

Brand Keys, in its Customer Loyalty Engagement Index report, suggested that brands need to engage with their customers in this fashion, partly because empowerment through social networking has inflated consumer expectations.

"If marketers don't have a real handle on the emotional side of the purchase and engagement process, they end up with a 'placeholder,' one whose name people know but don't know for anything in particular, and have absolutely no [brand] advantage. You might as well spend your entire marketing budget on coupons, deals, and promotions," Robert Passikoff, president of Brand Keys, said in a statement earlier this year.

So it's no surprise that some companies have already figured out that, while customers are watching their budgets, supporting a cause they believe in might be the best way to earn their business.

Perhaps the biggest participant in this kind of initiative is automaker Subaru, which, through its annual "Share the Love" event, donates $250 to one of five charities for every new Subaru bought or leased in the United States. The program has contributed $25 million to charities in the past five years.

Earlier this fall, Walgreen's participated in the "Get a Shot, Give a Shot" campaign to provide life-saving vaccinations to people in developing countries. Through a partnership with the United Nations Foundation's Shot@Life campaign, Walgreen's gave away one vaccine for every vaccine purchased in the U.S.

Breakfast food brand Kellogg's empowers consumers to give to social causes through its recently launched KFR Giving program. Powered by Kula Causes' technology, the program lets consumers donate to Kellogg's charity partners, including Feeding America, Action for Healthy Kids, the American Red Cross, Share our Strength, the United Way, and the Food Research and Action Center, as well as more than 120,000 schools nationwide, by converting their Kellogg's Family Reward points into cash donations.

Firms such as these have created rewards programs that drive loyalty by forging powerful emotional connections between the brands and their customers. Researchers expect many others will soon follow suit.

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