From Retail Customer Experience.
Loyalty programs can boost retail efforts but as new brands embrace them, more is learned about their implementation. Sometimes the experience doesn't always jive with the intended outcome, so with every success story, there are loyalty initiatives that fall short of the mark.
Kevin Yeow, president of Americas, International Customer Loyalty Programmes, said successful loyalty progdrams must include five fundamentals.They are:
- Having the ability to influence and track positive behavior change (and ROI).
- Having the ability to differentiate and target members on a segmented basis.
- Being able to recognize and reward transactional and non-transactional behaviors.
- Offering rewards that are relevant, achievable with a mix of practical and aspirational options.
- Capitalizing on unique benefits of each consumer touchpoint.
1. Ability to influence and track positive behavior change (and ROI).
Loyalty programs began with this fundamental goal in mind and it is still critical to success, Yeow said. The ability to influence and track positive behavior change has expanded vastly with the proliferation of available customer data. Twenty years ago, programs were simply rewarding transactions.
The benefit of this approach to the retail consumer: It delivers a fair exchange of value for customer’s loyalty and provides a foundation for building relationships beyond transactions.
The pitfall: Retailers must start with specific goals, correct metrics and a plan to continually evaluate an optimize efforts to be successful. Another risk factor is internal silos. All business stakeholders need to be aligned around the customer needs and be willing to reevaluate internal business processes to ensure accurate tracking and reporting.
Jitendra Gupta, with Punchh, a mobile loyalty insights platform, said there were three ways to evaluate and measure a loyalty program's rich data:
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Track rewards performance by measuring increased frequency. With the data, businesses can see an increase in frequency associated with program effectiveness. My measuring customers coming back more frequently, you can put a $ amount on the program effectiveness.
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Measure referrals by tracking which customers are referring their friends and how much are their friends are spending.
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Measure campaigns and how many new visits and purchases they are driving.
"With an ROI dashboard customers can always know what is working and what is not and course correct on the fly to get the best results," Gupta said.
2. Ability to differentiate and target members on a segmented basis.
While this may sound like a simple idea, it is still a primary challenge for many retailers, Yeow said. They often contend with disparate data sources and a vast quantity of data. The ability to consolidate consumer data, identify meaningful insights that address not just demographic differences but different motivations of your consumers is fundamental to loyalty program success.
"We encourage our clients to adopt a test and learn approach — ensuring each level of consumer insight adds to the ability to better deliver targeted products or service, communications and rewards, Yeow said. "The peak of segmentation is building full customer personas that include attitudes, motivations, social profiles, etc. Having that level of customer profile enables retailers to understand how customer needs may change from by channel or by day. The time-starved office worker mid-week is the same shopper who enjoys leisurely in-store browsing with the family on weekends."
The benefit of this approach to the retail consumer: It feels more relevant and personalized. The customer feels like he matters to that retailer, and that is the beginning of building an emotional connection with your customers. The best examples of segmentation/ personalization enable the customer to manage their own personalization settings for the relationship, Yeow said.
The pitfall: Collecting profile data and not using it to personalize communications and experiences is a missed opportunity. Consumers provide you with their personal information and expect something of value in exchange. If data is collected and perceived to not be used, it erodes consumer trust. That is the opposite of customer loyalty and advocacy.
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