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Recently, a mail order company in a highly competitive online market asked us what kind of data or information is needed to support a loyalty program. Our answer was that program requirements today typically require POS transactions (including member and store IDs), web data, contact details, and all customer engagement information, interactions that can be accounted for during loyalty program design. The thing they didn’t explicitly ask was what the data would be used for. Since this is the more interesting side of the marketing effort, I thought it worth taking a moment to quickly highlight the downstream effects of utilizing customer engagement data properly.
In his recent white paper on loyalty program design that actually creates loyalty, author Jeff Caplan, VP of Strategic Marketing Services at 89 Degrees, touches on the importance of showing customer appreciation. He writes:
“According to Forrester, negative brand experiences that lead consumers to feel “disgust, anger, or neglect” are eight times more likely not to forgive the offending brand. It doesn’t take much effort to extrapolate what that means in terms of lost revenue due to decreased frequency of purchases and lower retention rates. Corporate missteps are sometimes hard to avoid and good loyalty programs purposely build goodwill in part to offset the negative. Showing customers appreciation is a key part of this effort.”
Showing true customer appreciation is one of the easiest and cost effective actions brands can take, and yet one most completely fail to do. Appreciation in a loyalty program context means going beyond understanding individual customers with personalized emails. It means recognizing their needs and intents through known activity across all brand engagements and offering them relevant customer experiences that resonate on an emotional level. These are the engagements that complement the value of your core products and services, making it easier and more enjoyable to continue to interact with your brand.
Caplan continues to write, “Appreciation takes many forms and has one goal: to connect emotionally with members. Appreciation can range from a ‘thank you for being a member’ acknowledgement from front-line employees and random surprise and delight gifts to recognition on your birthday or membership anniversary. Similarly, member-only benefits that are always available (e.g. IKEA Family’s in-store extended playtime for kids) provide a mechanism to make members feel special. The good news about appreciation is it is operationally easier than some other program success factors. The other good news is it will help make your program stand out from the crowd.”
Data is mission critical for all aspects of a well running loyalty program, but for invested marketers who care about the customer’s point of view, it never hurts to take a moment to focus on how that data will be used to improve a customer’s relationship with the brand. As Caplan notes, showing appreciation is a big part of creating actual loyalty, helping your brand stand out from the crowd, which is vital for attracting and maintaining active customers. And no, sending a Thank You email after a recent purchase or as an intro to a new promotional offer, is not standing out from the crowd and most certainly not appreciation.
As Jeff mentions, one example is IKEA’s in-store play area for kids which makes it easier for parents to browse the showroom and make purchases. Another example is when an auto dealer offers a loaner vehicle or shuttle service so customers can run errands or get to work instead of wasting time in their lobby while their car is being serviced.
Which brings us back to the importance of data; effective customer appreciation will be limited by your usable data. A great loyalty program will help you gather a range of actionable data – i.e. transactional, behavioral, and emotional – that can be turned into customer insights and ultimately, more engaged customers.
If your current loyalty program is anything less than impressive, there are most likely missed opportunities to gain insight from your existing data. If you’ve resisted launching a loyalty program, it may be time to complete an opportunity analysis and see what value your current data is capable of adding to your bottom line. Either way, if true customer appreciation is something you can’t easily do effectively now, it’s time to bring in a partner that can make it happen – before you run out of customers to appreciate.
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