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Loyalty programs come in many shapes and sizes and have nearly a limitless number of potential options. Brands need to know the essential components of a solid loyalty program to make it effective and to drive results. The information provided below from Antje Helfrich and Laurie Meek from Lenati, a marketing and sales consulting firm located in Seattle, Washington, will help brands better navigate and understand loyalty program options. Lenati has also released a report on this topic entitled “The Future of Customer Loyalty,” which can be accessed here.
Antje Helfrich is a Senior Manager at Lenati. She has over 20 years of experience developing customer-centric products and marketing strategies and helps clients create meaningful customer experience programs that drive loyalty and generate business growth. She has worked with such leading brands as Starbucks, T-Mobile, Microsoft, AT&T, SAP, DSW, and Philips.
Laurie Meek is a Loyalty Manager at Lenati. She has over 10 years of experience working with Fortune 500 clients to design, launch, and redesign loyalty programs across industries. She has worked with such top brands as Nordstrom, DSW, and Vans.
The “Future of Customer Loyalty” report mentions two types of loyalty: emotional loyalty and behavioral loyalty. Could you give a brief background on the difference between the two? And, can a brand have both?
Yes, a brand can and should have both. Behavioral loyalty is loyalty that can be seen and observed: repeat purchases. Emotional loyalty is a sentiment and as such cannot be observed as clearly as behavioral loyalty. It is someone’s affinity for a brand. It is important that a brand have both, as transactional loyalty drives trips and purchases but may not be sticky over the long term. Emotional loyalty drives stickiness and long-term loyalty, even if not actively purchasing, emotional loyalty manifests as positive word of mouth, referrals, and other positive publicity that drives business.
How can emotional loyalty come into play as brands consider creating a program or a next generation program that stands out from the crowd?
We start seeing brands making a shift away from building a traditional rewards program and moving towards developing truly customer-centric programs that extend into the full product lifecycle. These programs offer a more experiential engagement model with authentic, on-brand services and experiences. Nike Plus is an early example for this type of program: It connects the best Nike has to offer (products, services, experiences) in a holistic membership program and deepens brand relevance through mobile-led and omnichannel experiences. We expect more such experiential programs to be developed, and some might be offered at a premium price point. Case in point, Lululemon is expanding a test program that offers curated experiential benefits for a fee. This type of more holistic loyalty model is where innovation is happening.
What are a few ways that you suggest brands create or build upon an existing customer-centric strategy?
Customer centricity means centering a brand’s activities, marketing, and operations around its customers, which in our experiences involves four core components.
First, a brand should start by developing a deep understanding of its customers. This involves developing a customer data collection strategy, connecting data sources, and establishing a stream of data and insights. The goal is to build a 360-degree profile of the customer, so the brand can anticipate customer needs and deliver relevant, personalized content, products, and services across the customer journey, as well as memorable, seamless, easy, and helpful service.
Second, brands need to prioritize solutions against the customer’s pain points. This involves mapping the customer journey across all touchpoints and building a framework for prioritizing solutions based on customer and business KPIs. As a result, brands will spend time on experiences, services, program design elements, benefits, etc., with the highest ROI.
Third, brands need to ensure they measure success through a customer-focused lens. A customer health dashboard connects business performance to customer behaviors, attitudes. and underlying drivers, which means that business reviews can be conducted (and investment decisions can be made) from a customer centric lens.
Last, brands should organize by placing the customer at the center of their strategies. By optimizing organizational roles and responsibilities and engaging teams and individuals cross-functionally around the customer, brands are able to deliver seamless customer experiences across channels. They should use regular business reviews conducted from a customer-centric lens.
Can you speak to the challenges and opportunities brands face when it comes to integrating technology into existing systems and the impact technology can have when it allows for a seamless experience?
Absolutely, technology is critical to building loyalty, and brands spend quite a bit of time, effort, and money on selecting and implementing a loyalty platform to help them acquire, engage, retain, and grow their customers. Loyalty tech selection can be very stressful, and we advise brands to keep a few things in mind.
For one, the technology solution needs to support the loyalty program design and business objectives. For example, the platform that best fits an experiential- and engagement-type program will differ from a classic transactional program, and future growth plans (e.g., expansion into new markets) have to be factored into the tech decision. The loyalty program should complement and integrate with the current technology infrastructure and systems.
Do you think all brands should strive to be the next Amazon when it comes to personalization and meeting expectations?
Not every brand can or should try to emulate Amazon’s data prowess. However, all brands need to think about how they can anticipate customers’ needs and deliver value throughout the customer experience to unlock lasting, emotional relevance. Personalization not only influences consumer behavior, transforming the brand’s value in the eyes of the customer, but drives positive impacts to the bottom line. We expect to see significant investment in personalization this year.
Do you think consumers are willing to share more details about themselves in order to get a highly personalized experience?
Yes, consumers are absolutely willing to share more information about themselves if the following conditions are true: First, they need to understand why they are being asked. Second, brands should only gather just enough information. And third, there needs to be a clear win-win for the consumer. We have seen this work well with many of our clients, including retailers Nordstrom and Vans. Progressive profiling is one successful approach for building the dataset needed to deliver highly personalized experiences.
Do you see data privacy control regulations impacting the future of what brands can collect, share, and use?
Absolutely. Given new laws, including the General Data Protection Regulation, it is more important than ever to include considerations around privacy and data security right from the start when building a loyalty program. Brands need to carefully think about what personal data is needed to provide the desired customer experience and how to handle this data on the back-end. Spending time on this at the beginning of the process can save a lot of headache (and dollars!) later.
Brands should be able to glean of few pieces of useful advice from our discussion with Helfrich and Meek. First, they need to establish emotional loyalty, not just transactional loyalty, with their customers, as this leads to stickiness. Emotional loyalty can be established through personalization, which has to be based on data. However, brands need to collect the right amount of data and to use it securely as they go about their personalization efforts. Engaging in these practices should lead to better ROI.
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