The loyalty landscape for 2024 has been perceived as a challenging environment for many brands. Concerns about the economy combined with the ever-increasing high expectations of customers have fostered a climate in which many brands seek to improve their loyalty offerings to retain customers while earning new ones.
Baseman works with brands to help them better understand their customer data, which enables them to build more personalized relationships and unlock the journey of “one to many” to “one to one.” The agency serves many retail clients but also partners with healthcare, financial services/banking, fuel, government, restaurants, hospitality, and more. The company also works with brand data in-house, which is critical when partnering with its clients.
Baesman’s flexible and scalable loyalty platform integrates with existing programs while the team works with brands to tailor solutions to meet loyalty objectives. Baesman counts many former samebrand-side marketers on its staff, and those perspectives ensure that brands can achieve loyalty program goals with little disruption.
Mark Johnson, CEO of Loyalty360, spoke with Kim Welther, Vice President, CRM & Loyalty for Baesman, about the challenges and opportunities in the year ahead, including defining and measuring success, metrics to consider, and what it takes to stand out in a crowd.
Embrace Change
Last year, Loyalty360 listened to brands as they discussed their interest in improving customer loyalty efforts. Most notably, many expressed a desire to add new functionality or even change existing program structures. As brands continue to study customer value propositions, changes to member benefits are being considered.
Welther believes change is good and that brands should not fear making changes to their loyalty programs. While some loyalty professionals “lock in” and stay the course, other brands are shifting focus — from creating and launching loyalty programs to investigating if loyalty strategies are working.
“Brands want to know if their programs are optimized and growing, and they want to know how to make them better. Brands are starting to realize that they need to make more changes faster,” says Welther.
According to Welther, one of the biggest program enhancements brands will focus on in 2024 is how to increase connections with customers outside of transactions. A renewed emphasis will be placed on cultivating emotional and experiential loyalty. Welther explains that once a brand has created the perceived value of a program and offered members hard, tangible benefits, it’s important to drive engagement with softer benefits — e.g., giving customers early access, keeping them “in the know,” etc. These steps will help ensure the program is developing brand loyalists and not focusing solely on tangible benefits.
Defining and Measuring Success
It’s not enough to make enhancements and wait for insights. Brands must proactively define what success will look like for their programs and determine how success will be measured. From an organization’s CFO to internal auditors, multiple teams need to understand what kind of return the program is delivering.
Welther agrees that this is one of the biggest challenges for brands as they look at program changes. While some marketers might set up pre- and post-enhancement KPIs, she emphasizes that there are many outside factors that will play into metrics that might not be a part of the loyalty program.
“You must be careful as you’re measuring results,” Welther cautions. “Align success metrics to the goals of the redesign. You need to ensure you’re aligning program objectives. If you pull back on your funding rate, your goal shouldn’t be to increase your reward demand sales because those aren’t in alignment.”
The financial model needs to be solid to make sure that the correct metrics are in place and the right goals are being met. Brands need to be able to confirm that enhancements have improved the program and are not serving as a detriment to it.
When asked to name the top three or four metrics brands should focus on from a loyalty program perspective, Welther points to active membership and retention rate.
“Those go hand in hand,” she explains. “The reward redemption rate is important for measuring engagement, but if it’s not a reward redemption, whatever that top perceived value benefit is, that’s where brands need to be looking at that engagement level.”
Welther also notes an important metric related to an activity engagement score as a newer one brands want to understand. Outside of the transaction, how are active members engaging? For example, brands should look at email open rates, the number of customers writing reviews, and whether members are earning points for completing activities.
“There are still many metrics within the KPIs we’ve used in the past that remain important today,” says Welther. “Some of the newer conversations we’ve had with clients are around how their programs stack up against others. Brands are anticipating a more challenging business environment in 2024. They are interested in how others are doing.”
Benchmarking against other relevant programs is a good practice, and Welther recommends laying on engagement scoring as part of the process. This is crucial when thinking about the metrics aligned with the program.
Value Will Be Critical in 2024
Baesman has observed that brands are looking to differentiate more in 2024. They are challenged to look at their loyalty programs and ask if they are more than ‘spend and get’ offerings. Does the program look different when compared to another? Brands seek to harness a true differentiator, rolling that through their loyalty programs in an effort to make them more successful.
“Brands need to recognize how they meet their customers in 2024,” says Welther. “Value is going to be critical, and value is going to be delivered in price, customer service, convenience, and so on. But this year, a brand’s loyalty efforts must put the customer first and create value in all ways possible.”
Standing Out in the Crowd
As more and more brands offer loyalty programs, it can be difficult for a brand to stand out in what’s become a “sea of sameness.” A differentiator must be established. First, brands need to take a hard look at their loyalty program and ask if it’s a good one. Is it doing more than driving retention to lead to the next purchase? Are brand loyalists being built through products and the customer experience? The top programs will do both, and brands need to scrutinize their efforts.
Welther believes brands seeking to differentiate make it harder than it needs to be.
“Baesman works with a lot of brands, and we can find a way to focus on a brand’s uniqueness and the value it can bring,” says Welther. “A good example of that is Sephora. The brand has done a good job of creating a community — through makeup tips, tricks, and tutorials. They offer something that helps their customer.”
Brands that can harness uniqueness and bring value to the customer will stand out, and many have achieved that position. If a brand still believes it is not differentiating enough within its loyalty program, Welther suggests spending time on optimizing what sets it apart and the value it offers to customers.
Personalization — The Next Big Thing
Having the right technology in place to help personalize the program for each individual customer is vital. Customers value different things, and that’s how brands can harness the differentiator and the customer. A brand’s customer base might include a segment that values experience above all, another that prioritizes price, or even one that values recognition and exclusivity.
“The next big thing in loyalty is building and delivering a program that allows the customer to choose the benefit that they value the most,” affirms Welther. “REI is a brand that does this well. They deliver on experience, profit sharing, extended returns, satisfaction guarantees, and free shipping for all their members. They’ve created a community of customers who are loyalists and passionate about the brand.”
The Changing Role of Marketers
At one point, creative and marketing were separate, but, today, things are changing. In fact, creative and marketing are now usually under the same umbrella and reporting to the same leadership. Brands have recognized that the two need to work in lockstep with each other. It’s more important than ever that data and strategy help drive the creative. It’s also crucial for the creative to go through just as much testing and learning as strategy and data. The two “separate” departments need to understand the value of the synergies and energy that they bring when working together.
The Role of Data in Marketing
Collecting and maintaining customer data is critical, and leveraging it will help marketers create a more personalized marketing strategy. Data can help brands define and create customer journeys.
“This is where segmentation comes to life and creates that one-to-one strategy,” says Welther. “Brands must view data as a way to understand how they can talk to our customers better.”
However, there are situations in which the amount, cleanliness, and kind of customer data can be a challenge to use to improve efforts and strategies. Marketers must determine whether a given data set is valid and how much data is the right amount to produce accurate results or guidance.
“There’s a fine line between no data and too much data, which can lead to analysis paralysis,” explains Welther. “While any data is better than none, you need to understand early indicators versus rollout indicators. When should you retest? When is the wrong data in the wrong hands dangerous?”
Welther encourages brands to triple-check their data — ensuring that the story being told relates to what it was intended for and what could be pulled from the data. Critical data is used to drive strategy, but brands also must understand the dangerous pitfalls of too much data or viewing it incorrectly.
The Biggest Challenge
For Welther and Baesman, internal technology is consistently the biggest challenge for brands. Other challenges include the right metrics strategy and a lack of resources. Those, Welther shares, can be supplemented with the right partner(s).
“Brands need to commit to a brand strategy of loyalty above all else,” finishes Welther. “Allocating resources to the team to allow for a flexible and ever-evolving loyalty program is vital. Don’t let technology hurdles stop strategy.
See also: Loyalty360 Executive Spotlight - Kim Welther