Loyalty Programs that Can Adapt and Evolve Will Command a Competitive Edge

Aimia Loyalty Health CheckThe world is not static. Everything exists in a dynamic flux. This applies to almost all aspects of life, and it certainly applies to customer engagement marketing. To stay successful, brands simply cannot afford to remain stagnant. They must be vigilant about continuously examining the efficacy of their marketing efforts, aLoyalty Program upkeepnd this includes the mechanics of a lucrative loyalty program.

During an upcoming webinar titled, “Give Your Loyalty Program an Annual Physical with a Loyalty HealthCheck,” Aimia will show marketers how to maintain a successful loyalty program in today’s dynamic environment.

To get a better idea of the fundamentals behind this concept, Loyalty360 spoke with Manu Sarna, Aimia VP of Loyalty Strategy & Analytics; and Jesse Grittner, Aimia Senior Director of Loyalty Strategy & Analytics, about how brands can create (or recreate) a competitive loyalty program.

How important is it for marketers to give their loyalty programs a checkup?

Sarna: It’s really important. It is a very big line item for many marketers, so it’s essential to make the most of that asset and make it as profitable as possible. And the fact is that things change over time, and you need to keep those programs fresh. In exactly the same way you get your car tuned up or you go to the dentist, you need to give your loyalty program regular review and maintenance.

Is it common for most brands to neglect loyalty programs in this fashion?

Grittner: We see it very frequently. We refer to it as the “set it and forget it” model. Brands tend to put a lot of time and energy into designing their program and launching it with a big splash. But once it’s out there, they tend to leave it, and assume that it will continue to run the way they meant it to. The problem is that the context changes, the competitors may change, and consumer expectations change. Just think about what has happened over the last few years in terms of digital engagement and the user experience. All those things are changing, and if you are not revisiting your loyalty program, you are at risk of becoming irrelevant.

What are the benefits of balancing the internal and external perspectives of a loyalty program?

Sarna: It is really about finding the sweet spot between those two things. Quite often companies will focus only on the external perspective, and on what the consumer sees and thinks about the loyalty program itself. But you have to look at the operations internally as well. And there are lots of things tied up into that. Whether that’s proactive liability management, customer lifecycle communications, or tightly managing the program P&L, all those elements often get passed by. Getting that balance and finding that sweet spot is where the value lies.

Are you noticing any new trends that customers are expecting from loyalty programs now?

Grittner: Digital is a big trend. The traditional model was very much about getting a card for the wallet or keychain. But we are moving to a world where every customer has a smartphone and they expect to engage digitally. Customers want an experience that is immersive and useful, not necessarily just a loyalty app. That is not going to be helpful enough for people to put it on their screen. The digital experience should be something that has a bunch of tools within the app, of which loyalty is just one layer. That’s one of the big trends that we are seeing.

Sarna: I would add that many programs are also incorporating very powerful experiential pieces. So, for example, maybe you could redeem points for a great event with a top chef. How much of that is actually bringing direct value to the massive customer base is probably questionable. But it helps build the brand in the eyes of the consumer, and that is really powerful.

We hear a lot about the challenge of simplicity. Are you seeing that as well? And, if so, how can brands maximize simplicity to increase the effectiveness of their loyalty program?

Grittner: Yes. We think simplicity is critical because there are more and more demands on consumers’ time and attention. And people are looking for opportunities to engage, but it has to be on their terms and as simple as possible. For example, we had a client with multiple lines of business, each with its own business dynamics, margins, and operating structures. Given the massive differences across their business, their view was that the program had to reflect those differences and therefore reflect that complexity.

And we helped them figure out how to move away from that complexity and actually abstract their way to simplicity. So companies can look for the average margin, or the average benefit across many different lines of a business, and set the program up in a way that is simple for the customer. Brands can then manage that complexity on the back-end.

Everything changes so rapidly now. So how can brands hope to stay ahead of the curve, to quickly adapt to customer behaviors and to implement the right technologies for doing so?

Grittner: It is less about the specific technology, and more about consumer needs and about what you are trying to create for the whole brand experience. Sometimes you can run into the “Shinny Penny Syndrome” and have a lot of people chasing expensive new things that, frankly, may not add much value. They may add even more complexity to the experience.

So brands should really start with a core understanding of their overall objectives, and how they are laddering up to those from the loyalty program. Then they can work back from there to find the technologies that can deliver on that experience.

Sarna: We are also seeing brands outsource their technology more and more now. It has stopped being a competitive advantage to try to do it in-house because you simply can’t keep up. So we are seeing them outsource that, and then try and focus on the delivery aspect, rather than on the infrastructure itself.

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