How to achieve loyalty success in 2016
With a proven positive impact on the bottom line, customer loyalty programs are becoming a must-have for business. But where should you steer your thinking – and upcoming budget – to make sure your loyalty program delivers in 2016?
We heard from industry leaders and looked at the market, both locally and internationally, to find out what’s driving loyalty success.
Innovate to build customer relationships
Good customer relationships will help boost business for any company, but they are especially vital for companies that compete head-to-head and offer comparable products and services. “All that we have in terms of competing with competitors these days is our customer relationship,” said Tim Sheedy, Forrester Research principal analyst, at the Salesforce World Tour in Melbourne.
A loyalty program is a great way to get an edge in customer relationships. But just having a stock-standard program isn’t enough. Loyalty programs need to be “innovative” to set them apart from competitors and must also speak to the “head and the heart” of customers, says Adam Schaffer, managing partner at Ellipsis & Company.
“Fundamentally you’ve got to understand what’s relevant to your customer base and you’ve got to innovate in a way that’s relevant to your customers to change their behaviour,” Schaffer says. “It’s about opening a dialogue and building a meaningful relationship with your customers and learning about them,” he says.
Schaffer warns against adopting a “copycat” points-based approach because it’s the easy option, or putting too much emphasis on technical capabilities during development. “What happens then is that you end up with a systems-led rather than a customer-led strategy.”
Factor-in your business objectives
Developing a loyalty program is exciting. It’s great thinking about some of the fun and creative ways you can reward your customers and grab their attention. But do these ideas complement your business objectives? Schaffer says they should.
“If you don’t have an underlying business perspective that outlines the behavioural change you want to achieve, then all you’re doing is coming out with cool marketing ideas,” he says. “You need to align your program with business objectives and have a very clear view on what success would look like.”
Schaffer says once a business objective is identified, running the program strategy against historic numbers to build a business case is a good way to gauge whether your program will be successful.
Consider possible loopholes
Loyalty programs need to be easy to use and understand, but not easy to exploit. When designing your system, consider ways that customers might try to ‘game’ it. And if you’ve already implemented it, accept that you may need to adapt it.
Take US coffee chain Starbucks. Fortune reported that Starbucks recently “overhauled” its loyalty program’s ‘star’ rating system because some of its customers had started to work around it. Initially customers were awarded one star per transaction regardless of the transaction amount. But some customers asked staff to put multiple purchases through in separate transactions to receive extra stars. The impact? More time at the register for staff and longer queues for customers wanting their coffee hit.
Starbucks reportedly said that only 1% of its customers asked for multiple transactions. But with 11 million members this equates to around 110,000 customers — enough to make an impact and for the coffee chain to take action. Starbucks now rewards members with two stars per dollar spent, regardless of the number of transactions.
Make sense of your data
So, the ‘data scientists’ have been beavering away in the backroom capturing reams of data to influence your loyalty program and you now have access to data that you didn’t even know existed. Fantastic! Now what?
“If you want to collect data, you need to organise it,” said Marek Rucinski, Accenture Analytics managing director, at the Salesforce World Tour. “Then you can start acting with purpose.”
To really leverage your data and reach specific customers, Rucinski says that the business also needs to get on board and understand how the data aligns to broader objectives.
Prepare for the customer service impacts
It’s great when your customers start to engage with your program, but you’ll need to manage and respond to this activity. Even in the online world, good service remains a core part of any customer interaction.
Customers will use social media to discuss your program. If your program trips up, you’ll read about it online. Around 90% of social media sentiment towards loyalty programs is negative, according to a Capgemini Loyalty Report. Customers go online to vent about poor customer service, including long call wait times, being transferred multiple times and uninformed call centre staff. Invest time and money to respond to these comments and keep your customers on board.
In addition to teams working in call centres and customer service hubs, you’ll need to make sure all customer-facing employees understand your program. Capgemini says US pharmaceutical company Walgreens ran a series of webinars and created blogs for customer-facing employees so they could become ambassadors for its successful Balanced Rewards loyalty program, which has 80 million active participants.
Get your content ready, and right
It’s hard to have a meaningful conversation with someone if you don’t know who you’re talking to, right? It’s the same case when developing content for your loyalty program. Schaffer says doing a thorough customer understanding piece will pay dividends when you start reaching out to your loyalty members.
“If you understand your customers, then you understand who you are talking to and where the values lies,” he says. “And if you’ve got segments to show you understand what the relevant products are for them, then good content naturally flows from that.”
He warns marketers to be wary of pushing a hard sell or just products and services. “Don’t think about what you want to tell the customer, think about what the customer wants to hear. And if you offer value, then you’ll get value back in return.”
There it is. Successful loyalty programs need to be developed while keeping your broader business objectives and customer experiences top of mind. We can help you factor these considerations into your plans when creating the technical base for your program.