All loyalty programs aren’t created the same, evidenced by their range of success and brands’ ability to maintain that passion among customers that fuels advocacy.
Carlos Dunlap-Beard, vice president, loyalty solutions & business development at Snipp, answers three key questions about the ultimate success of loyalty programs and why some succeed while others either fail or become stagnant.
Why do you think some brands have winning customer loyalty strategies and others don’t?
Dunlap-Beard: Wow! What a tough question off the bat.
The thing to know about customer loyalty and engagement initiatives is that there’s no single approach that works for all brands. A program that works well for Coke may not work as well for Mountain Dew, for a variety of reasons such as:
- The branding is not the same
- The target audiences are different. In this example, Mountain Dew is targeted toward a younger demographic
- Organizationally, the brands are run differently. Although both brands want to sell as much product as possible, the processes, operations, and decision-making structures are different.
- And most importantly, even though both brands may have developed an awesome strategy that fits their brand objectives and target consumers, even the best laid plans can be laid waste by subpar execution.
Strategy and execution must be aligned for programs to achieve optimal results. Unfortunately, not all organizations are equally committed to both these ideologies.
What are the key factors involved that separate brands from being successful with customer loyalty programs and those that struggle?
Dunlap-Beard: There are three cardinal rules when it comes to loyalty programs, and they are:
- They must be championed from the top down and be integrated into the culture of an organization. If the C-suite isn’t supporting the initiative across all functional areas, then chances are there will be a weak link in the chain.
- Execution is critical. Therefore, having alignment across the organization to deliver the appropriate customer experience in all channels – and including partners and vendors – is critical.
- It’s not about the brand, it’s about the customer. Organizations shouldn’t try to enforce their will, but instead understand that winning strategies are customer-focused – not brand-focused. It’s been proven many times over – in business and in personal relationships – that what you say is not nearly as important as how the recipient receives your message.
What is being done well in the customer loyalty strategy arena and where do the challenges lie?
Dunlap-Beard: Loyalty program sponsors are doing well with program branding, specifically with tying the program to the overall brand rather than keeping the program distinct. Additionally, member acquisition efforts do an excellent job attracting and enrolling customers into the program. The cost to acquire members is much less in the digital age than it was during the height of printed “direct marketing.”
For the majority of programs, the trouble arises in four areas:
- Engagement. Usually, there is a significant fall off in activity after the first 30-90 days of a member’s life in a new program. There are many reasons for this, with the top ones being: the experience is not on par with the marketing message; the brand is more focused on acquisitions and doesn’t spend nearly as much effort on retaining or inspiring existing members. Best-in-class programs do their best to imprint positive experiences on new program members in the first 90 days after they’ve joined the program, as well as find ways to periodically delight them throughout their program membership.
- Appealing rewards offers. Not all rewards appeal to all program members. A good guideline to remember is that a variety of rewards is usually a good thing, even if some of them don’t lead back to your brand. And it’s important to have rewards at various redemption levels, thereby letting members participate in the way they prefer (low-hanging fruit for those who like immediate gratification and more aspirational rewards for those who are willing to wait for bigger and better options).
- Validating purchases for CPGs. Proof of purchase has long been a struggle for packaged goods companies. And most times getting help from retail partners is next to impossible. Fortunately, technology has evolved, now allowing CPGs to capture end-user data and to actually put names, faces, and behaviors to a previously unknown consumer.
- Measuring the financial impact. Feelings and instincts are awesome because most people like a good story. However, when it comes to understanding the impact of a good loyalty program the thing to remember is: If it can’t be measured, it “probably” doesn’t matter. Daily, weekly, monthly reports are essential to understanding the program’s impact on customers and on the business. Likewise, quarterly strategic program reviews are critical to reversing negative trends and accelerating financial growth.
This article first appeared in Loyalty360. October 25, 2016.