Marketers face several challenges in integrating loyalty programs, according to Suresh Vittal, customer intelligence analyst for Forrester Research, who discussed the issue in a webinar on loyalty technology pitfalls sponsored by Kobie Marketing and hosted by Loyalty 360.
“The biggest challenge that we hear from loyalty marketers, regardless of which vertical, is that they are struggling to differentiate their programs,” Vittal said. “Loyalty is a hot program.”
It’s a top priority for CMOs, according to Vittal. Among the questions organizations have regarding loyalty:
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How to engender loyalty among customer base?
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How to retain the loyalty?
Loyalty enables companies to expend less effort in retaining customers, charge a price premium and provides predictability in the earnings stream, Vittal explained. But companies are still struggling to differentiate their loyalty initiatives. Though differentiation is a challenge, it also presents a unique opportunity for differentiation and experimentation.
Technology is critical to offering consistent, customized experience across channels is another challenge for marketing organizations, Vittal added. Getting the technology and the analytics correct ensures that the loyalty program keeps up with customer demands.
“Keeping up with the demands of customers and being able to design rewards that are relevant to them ensures greater participation,” Vittal said.
Marketers are struggling to integrate campaign management systems with their loyalty programs, Vittal added, meaning difficulty sharing business logic, offers and messages as well as the ability to deliver messages at the point of interaction.
“A loyalty program has to excel across a wide range of dimensions,” Vittal said. “This is what makes loyalty such a strategic initiative for the business – it straddles marketing, business operations, support and sales. Marketers who embark on a loyalty solution have to get the strategy right.”
To do so means overcoming several challenges:
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The loyalty strategy has to work with the company’s CRM and business strategy. Tiering, segmentation, database management, multichannel campaign management and analytics have to be examined.
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Proving incremental ROI
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Measuring consumers’ perception of value: Among the options for doing this are focus groups, panel-based research, measurement of consumer performance and penetration rates, reward redemptions.
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Creating a single view of the customer across all channels. Failing to do so handicaps companies when it comes to relevant offers, ensuring that they are talking to the customer at the right place and the right time.
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Creativity: “A loyalty program must also be very creative,” Vittal added. The brand has to be appealing to the customer. The brand has to be appealing to the end consumer.
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The liability with the points/rewards carried on the books
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Rewards fulfillment
“The key thing to remember here is that not all of these aspects are controlled by the marketing organization,” Vittal added. Loyalty platforms have to exist across multiple platforms, making them extremely complex. Most of these technologies will contain a core set of functionality, including a currency engine, member management, campaign automation, offer management, data warehousing support, internal interfaces and external interfaces.
The loyalty initiative extends beyond a simple core program, Vittal said. “The loyalty program has to ensure that you are able to collect data from multiple systems. The system also has to ensure that you are correctly processing and organizing the data. The loyalty systems must also extend into presentation layers and cross channels.”
“Marketers emphasize technical capabilities when selecting loyalty technology platform, but aren’t seeking technology for technology’s sake, Vittal said. Marketers also focus on the contributions these platforms make to their business in terms of strategy and the value that the platform delivers.
“Balancing this technical performance with value becomes very, very important for marketing organizations,” Vittal said. Customer data has to be available to the loyalty platform to deliver relevant experience across multiple channels.
Read the related Loyalty Management magazine article: Six Recommendations to Resolve Operational Issues for Loyalty Programs