Mark Johnson CEO The changing definition of Loyalty and the opportunity for relevance

One of the interesting trends we have witnessed over the summer of 2013 is the increased interest in loyalty, customer centricity, and engagement; we are quite thankful for the increased impetus and focus. We continue to see the connotative definition evolve from the traditional and somewhat arcane points-based, and transactional reward process to the belief that Loyalty is and should be about behavior. Yet the consistent talk and interest has resulted in numerous focus points.

We see Aimia’s recent acquisition of Smart Button as a push to increase the efficacy of its processing platforms, the ascension of the term loyalty in Google search, to the recent roll out of a program by Jamba Juice, the redo of the Petro Canada program, and to the impending program redo from Dunkin Donuts. We have also witnessed the quest for truly loyal customers is gaining momentum, evidenced by senior level marketing focus and increased capital expenditures from the finance side of the house. Technology companies continue to enhance their program offerings as well as their product positions to address the increased relevance of customer centricity, engagement, CRM, and loyalty.

Yet the fundamental belief in loyalty is to have a core group of consumers (fans) willing to enter into a unique and somewhat exclusive relationship with the brand based on a series of traditional beliefs (the Golden Rule being one) and the realization that the consumer does not have an infinite capacity to engage with all brands. The belief that loyalty is bigger than a program and can be measured and influenced by those who are the vanguard in the space is fascinating to behold.

The great debate – To close your program or increase the focus!

One of the most interesting, temporal, and therefore topical discussions that has been part of a high percentage of recent calls (with brands and technology providers alike) this month is the high profile shuttering of a series of large loyalty programs. People have wanted to know my (Loyalty 360’s) opinion as to the shuttering of a number of the regional programs (Jewel-Osco, Shaw’s, and other Albertson chains) and whether that is a prudent business decision from both an operational and customer perspective.

The challenge we continue to see is the ability for companies to keep up with the rapid proliferation of data, emerging technologies, increased customer complexity, and employee/operational issues that impact these programs coupled with the ability to run effective VOC, customer centricity, and loyalty programs.

The key issues are basically two-fold in the cacophony of external noise.

First, brands need to be able to run their loyalty programs and, more importantly, loyalty processes effectively, yet the complexities are increasing in the ability to effectively execute. The challenge to understand the disparate, complex, rapidly changing technologies, as well as the irrationally complex customer amid a mountain of proliferating data (actionable and not) is sufficiently difficult and becoming moreso. The challenge is brands that preach customer centricity and a focus on customer loyalty, yet do not have the actual ability to execute on this promise, can bring significant damage to the company. Running programs that are not effectively designed, monitored, or enhanced on a continual basis with an eye toward both the customer and subsequent increased efficacy in their marketing and communications, do not benefit the brand, its operations, or the customer. In those situations loyalty programs (hopefully not loyalty in and of itself) should be shuttered.

Second, focusing on everyday low prices or other positioning offerings is something that not all brands can accomplish well. The brand promise is the vision for the customer and should be the guiding principle that touches its audience. Yet the positioning to the customer SHOULD be considered. The core of the customer and the brand’s service level offering should be in line as well. When you tell brands that price is going to be equal to all, there is some value to a good percentage of the audience, yet that message screams that we do not want to have that unique and valued relationship with you. The challenge to assuage the market when brands are scrapping their loyalty programs to focus on price is challenging from a SLA offering as you scale it down.

We all realize that the service level expectations of a Walmart is NOT the same as that of Grocery store such as Kroger, which has the detailed and actual datasets to use as a basis to communicate to (with) you. Yet the SLA of Walmart is consistent with its brand proposition and messaging; and this value is consistent to its customers’ expectations. What’s more, a bigger question pertains to the loss of the actionable datasets and how that should be valued as well. Remember a few years back when the value of AA loyalty program technology offerings exceeded that of American Airlines itself. How is this to be valued?

Also, a realization that we are taught on Day 1 in business school is that we should not be competing on price; yet?

The connected economy impacts the consumer and the vacation?

For the first time on our family vacation I realized that the “connected” economy we live in with smartphones and tablets is truly “always” on. I realized this more than ever during the family vacation, as the challenge of being “always” on means that you are mostly “always off” for the brand / marketer trying to communicate with you in a mass and irrelevant manner. The ability of the irrational-based human mind to engage with and process marketing communication messages is more of a challenge than ever before. Individuals have only a finite capacity to “pay attention” and if consumers continue to be “on” in times where they are supposed to be “off” the ability to engage them is going to be more challenging, especially in light of increase focus on attribution.  More of this on Monday.

Written By: Mark Johnson, CEO, Loyalty 360 - The Loyalty Marketer's Association

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