Most brands understand the value of loyalty, but few get it right. Generic loyalty tactics are costly and fail to attract customers. Retaining loyal customers is critical as attracting new ones becomes increasingly difficult in crowded, competitive landscapes. So where do you start? What do you need? What can you do without? With so many buzzwords and claims, how do you determine the value of loyalty for your brand?
Historically, loyalty programs provided a way for brands to reach customers, reward them for purchases and differentiate the brand from competitors. The original loyalty programs were built with the sole objective of reducing customer churn and blindly rewarding “loyalty”. Today, loyalty programs need to go beyond point-based, purchase-based and transactional programs to deliver the types of frictionless, relevant and service-driven experiences customers crave.
More than half of US adults like when loyalty programs give them personalized offers. Brands must deliver finely-tuned and highly personalized experiences to each consumer at the optimal time, through the optimal channel. Loyalty programs are often the conduit to direct consumer relationships and better personalization. Here are three ways your organization can shorten the time to value for your loyalty program:
Build a fact base of current situations across multiple sources of insights while identifying the largest opportunities and key risks. Describe existing problems in the areas of customer loyalty, data management and engagement, including why the issues exist and which solutions have failed to address them in the past. To build a sense of urgency, leverage financial metrics that reflect the impact of these functionalities on business outcomes.
What do you expect to get out of a loyalty program? If your goals are to grow the business by growing customer spend and reducing churn, then discuss a loyalty program’s strength in predictive models that recommend next-best-actions and predict customer churn. If your goal is a better customer experience, then discuss how loyalty programs provide experience-based perks (access to special events or areas, skipping the line, and returns pick-up) to align with a customer’s desire for reduced friction and increased convenience in the shopping process.
Once key stakeholders are aligned and KPIs are identified, it’s time to take a look at the hardwiring. Do you need to make additional investments to support the function and measurement of your goals? What are the barriers to obtaining consistent, cross-channel customer profiles across the organization? As customers continue to shop, engage and communicate on a variety of channels, brands must invest in technology to build unified profiles, and use them to deliver personalized experiences, rewards and loyalty program tactics.
Brands have been doing traditional loyalty for a long time. It’s what they know. And in the past, one-size-fits-all, generic tactics might have worked, but those days are gone. It’s time for change. Consumers have shifted how they want to be approached with loyalty, requiring a digital transformation — not just for marketing or IT, but your entire organization.