Value and Variety Drive Attractive Customer Loyalty Programs

Strategy and execution must be aligned for loyalty programs to achieve optimal results, but not all companies are equally committed to both these ideologies.

For loyalty programs to be successful, three key elements need to be in place:

They must be championed from the top down and be integrated into the culture of an organization.

Execution is critical. Having alignment across the organization to deliver the appropriate customer experience in all channels, including partners and vendors, is critical.

It’s not about the brand, it’s about the customer. Organizations shouldn’t try to enforce their will, but instead understand that winning strategies are customer-focused, not brand-focused. What you say isn’t nearly as important as how the recipient receives your message.

Loyalty360 spoke with Tom Beauchamp, senior vice president, business development: direct to consumer practice group leader, Halo Loyalty (formerly House Advantage), to find out his company’s approach to developing successful customer loyalty strategies.

What kinds of customer loyalty strategies can brands employ to drive deeper, more profitable relationships with customers?
Beauchamp: Providing relevant rewards based on recent customer activity is more important than repeating the same offer. While frequent purchasers do expect value, they also enjoy variety. Often it is easier for brands to reach into the library of prior successful offers and reuse them, as opposed to taking the time to constantly modify and test variations. Having a process where a small, but steady, proportion of offers is updated each cycle does not cause excessive workload and insures a steady change in the end product.

How can integrated solutions be effectively used in this process?
Beauchamp: Aggregating all customer activity into a single customer database allows selection of the most relevant reward based on a comprehensive view. If qualification for offers is based on dated or partial information, you may be penalizing your most active and varied customers by not including all of their activity.

What is the missing ingredient (s) to current relationships that brands have with customers?
Beauchamp: Understanding what activities are most relevant to determining offer selection. If a regular customer chooses a product that is outside of the normal purchase pattern, price, category, and quantity, it should be a trigger for differentiation and, if successful, repeated.

What are brands doing well in this regard and where do the challenges lie?
Beauchamp: Many brands are not performing well in this regard. Too often, it is easier to repeat prior programs as opposed to creating an environment of continuous experimentation. Formalizing the test, analyze and modify regimen, and incentivizing the marketing team to continuously cull the bottom 5 percent and replace the offers, graphics, and text with fresh assets and messages is additional work, but can result in positive results. Advanced systems including recommendation engines and AI can help identify the right candidates for change, but still require human assistance.

How should loyalty marketers be measuring the strength of their customer relationships?
Beauchamp: There is no silver bullet here. Customer retention and willingness to publicly promote the brand, product, or service is never a bad choice.

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