Hate to say “I told you so.” But….
We have been saying for about a year now that marketers are doing a good job at cookie-cutter customer loyalty programs. A new CMO Council Survey released earlier this week confirms that. Unfortunately, the survey confirms another more disturbing trend that we have predicted: Marketers think they could be doing better at loyalty.
And they could.
Here are the details: Surveying more than 600 marketers with active loyalty programs the CMO Council found that most (61 percent) believe that loyalty program participants are the best and most profitable customers. An almost equal number of respondents (65 percent) view customer loyalty program investments as a very essential, or a quite valuable part of the marketing mix. Unfortunately, only 13 percent of respondents believe they have been highly effective in leveraging loyalty and brand preference among club members, and nearly 20 percent don't even have a strategy for this. Another 25 percent admit they have not mobilized brand loyalists to become active advocacy agents, either.
The study also reveals that marketers are mostly inducing loyalty with discounts or free products and premiums rather than quicker, better service or improved customer handling. Some 39 percent of respondents view discounts and savings as the key member benefits, 34 percent view free products and premiums as essential incentives, while 33 percent are committed to offering points for merchandise redemption as a further motivator.
The report contains other good information points that show the dichotomy between what marketers like and what they wish they could do with their loyalty programs. Suffice to say that loyalty programs will continue to be a preferred customer retention model. But in order to close this dissonance between loyalty reality and the desired state, we recommend the following actions:
Stop shelling out random and predictable points: If a company thinks rewards are points and points only, something’s wrong. If you truly understand what your customer wants, it has to be more than points. It’s a relationship and an experience. Points can be given by your competitor. Get your data engine running to find out what moves the valuable customer and it will add to your program’s profitability.
Surprise and delight: Customer data can provide clues about the experiences that will set you apart. Maybe it’s a discount for frequent customers. Maybe it’s an invite to an in-store only event for customers that have fallen off in their spending habits. If you don’t find out, you’re stuck on the point treadmill.
Segment beyond loyalty members: Most companies look at their loyalty program members as one large segment. That’s a mistake. There are plenty of behavioral segments, value segments, and demographic segments within the loyalty membership.
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