Most brands understand the value of loyalty, but few get it right. Generic, one-size-fits-all loyalty tactics fail to attract customers and are costly for brands. Retaining loyal customers is critical to a business as attracting new ones becomes increasingly difficult in crowded, competitive landscapes. On top of that, navigating a crowded loyalty marketplace is tricky and time-consuming in general, but even more so when considering what your brand defines as loyalty versus simply thinking about it in terms of what is working for your competitors. So where do you start? What do you need? What can you do without? Amidst all the buzzwords and claims, how do you really understand the value of loyalty as it applies to your business and how can it drive incremental spend?
Historically, loyalty programs provided a way for brands to reach customers, reward customers for purchases and differentiate themselves from competitors. Old school loyalty programs were built with the sole objective of reducing customer churn and blindly rewarding “loyalty”. Loyalty programs need to go beyond point-based, purchase-based, transactional programs to deliver the types of frictionless, relevant and service-driven experiences customers crave. With organizations who have multiple customer touchpoints and channels, operational silos can create a disjointed and confusing customer experience and lead to the loss of loyalty.
Loyalty needs to be redefined to deliver finely-tuned and highly personalized experiences to each individual consumer at the optimal time, through the optimal channel. Loyalty programs are often the conduit to direct consumer relationships and represent a treasure trove of first-party data that fuels better personalization.
Here are three ways your organization can shorten the time to value for your loyalty program:
Align and organize internal stakeholders around a transformation
Build a fact base of current situations across multiple sources of insight 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 what 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.
Strategize and determine your KPIs
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.
Assess existing tech stack
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 profile across the organization? As customers continue to shop, engage and communicate on a variety of channels, brands must invest in technology to analyze and collect customer data, react on the data and deliver unified, 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 — a change that requires a digital transformation of not just the marketing department or the IT department, but your entire organization.