TikTok is a loyalty program waiting to happen. Just ask Walmart.

by | Aug 31, 2020 | Loyalty Programs, Member Engagement

INSIGHTS

If you’ve not heard of Bella Poarch, you’re probably a Boomer.

Bella is the latest TikTok megastar. Her quirky lip-synch short videos have earned her over 8m followers (at last count) and over 80m Likes. This includes a single 15 second clip which has been viewed more than 210 million times.

Bella (@bellapoarch) also enjoys the ultimate compliment; thousands of other TikTokers have copied her videos, with some earning millions of Likes themselves.

The crazy part is that non-TikTokers (and indeed many TikTokers themselves) cannot understand the fascination with Bella (‘she has how many Likes? WTF?’). Watch her most popular video and decide for yourself.

TikTok is a drug like no other. Members talk of falling into a TikTok hole, consuming hundreds of clips averaging 30 seconds or less, only to realise that hours have passed. TikTok is a movement, a gathering place, a social statement, a prank, a reveal, a stage-show and a squirming, writhing, deconstructing, reinventing, mash-up expression of (mostly) youth culture that attracts eyeballs like kids to Halloween candy.

And it’s those eyeballs which are attracting companies such as Microsoft and Walmart to take an interest in purchasing TikTok’s US business (after President Trump threatened to ban TikTok from the country citing potential threats to U.S. national security).

More broadly, social media companies such as Facebook, Instagram and SnapChat are rapidly evolving into shopping channels. Fans can see what Influencers are wearing or spruiking, then click to buy, sometimes via embedded Marketplaces.

Social media channels are earning revenue by charging advertising fees, but they can also make direct commissions on sales.

Direct commission on sales can be generated using affiliate networks. Affiliate is a digital business model connecting thousands of advertiser and promoter businesses globally. The promoter business publicises the advertiser to their marketing database. The customers click through to the advertiser’s online store and transact. The advertiser pays a percentage of the total amount spent by the customer to the promoter, known as affiliate marketing revenue. The promoter rewards the customer with cashback or points funded by the affiliate marketing revenue.

Thus, by embedding brand links (or product links) into a post and encouraging members to click through to the brand’s website to purchase, the social media platform can earn commissions (anything from 2% to 20% of total spend).

So what does a TikTok-Microsoft-Walmart future look like? And what does this have to do with loyalty programs?

Imagine watching Bella and admiring her top, her eyeliner, her accessories or her shoes. You want it? Click to buy and it’s yours. For the $100 you spent, the brand pays TikTok $8 commission. TikTok rewards Bella with $3 of this commission, which might be straight cash, but could also be points, miles, credits, gift cards, Bitcoin or any other form of loyalty currency.

This model won’t be limited to major Influencers like Bella. In the TikTok future, anyone can play, turning hundreds of millions of social media addicts into the most dynamic advertising platform of all time, with a rewarding loyalty program to stimulate continual engagement.

For a brand to drive more traffic, all they need to do is increase their affiliate commission to better reward TikTokers for promoting their products.

In the olden days, advertising agencies would run focus groups to find out what young people think is cool in order to develop an effective marketing campaign. What is emerging is a paradigm where young people are the advertising agency, creating an endless stream of addictive content with products woven into a cutting-edge narrative that agencies could never possibly keep up with.

TikTok will soon be the most influential shopping channel in the US, and Bella (and the next Bella and the next) will be so rich she can hire a body-double to make her clips while she reclines on her Gucci couch in her Caribbean mansion.

For Microsoft, TikTok can be the social media platform they need to compete against Facebook. For Walmart, TikTok can become a major source for all their online traffic, generating a firehose of customers and tons of personal data to help them compete against Amazon. Hence, their interest. They see the future.

The future is social shopping, and the advertising agency is everyone.

Philip Shelper, CEO of Loyalty & Reward Co, has many years experience within the loyalty industry, including roles at Qantas Frequent Flyer and Vodafone. Loyalty & Reward have consulted to over 50 major brands in the past seven years.

Phil is a member of several hundred loyalty programs, and a researcher of loyalty psychology and loyalty history, all of which he uses to understand the essential dynamics of what makes a successful loyalty program.

Phil is totally addicted to TikTok and needs help.

Let’s connect!

LinkedIn: https://au.linkedin.com/in/philipshelper

Twitter: @phil_shelper

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