The customer landscape is changing; and as a result it is becoming increasingly difficult to keep your customers loyal. Data-driven marketing is the future, and loyalty programmes are the perfect opportunity to collect vital data about your customers that will inform all areas of your business: from how your marketing budget is spent; to the products/services you offer; right through to merchandising or how your front-line staff communicate with customers.
Aligning your business around the customer has never been more imperative. Whether you’re just starting out, or you have a loyalty programme already in place, here are the questions to be asking of your marketing team to evaluate how investment in customer loyalty benefits your business.
- What data/insight can be gathered from the loyalty programme, and how will it bring us closer to our customers?
The loyalty mechanic, whether this is a plastic card, mobile app, web or social imprint allows for the transactional information to be gathered and drawn together with other data sources such as social media, mobile or email activity etc. into a single customer view. Analysis and insight from this data then allows you to take action to drive the required behaviours; whether you are trying to get customers to stretch spend or increase their frequency.
- How much will a loyalty programme cost us?
- Technical: which platform will you use to design, manage and report on your loyalty programme? The technology that you chose to invest in will impact on the way customers experience your programme. For example, if you’re using CRM to collect basic contact and spending data it’s likely that your technology costs are going to be significantly lower than someone who connects data across all touch-points. But remember technology is an essential investment if it presents greater opportunities for data collection.
- Marketing: You need a clear strategy behind your programme to drive behaviours. What are your ‘Welcome’ and retention tactics? Consider where and when customers will interact with your programme and ensure that communication is consistent to offer a good experience.
- Benefits: These will vary in cost, and can be selected based on your budget. Will you offer limited-time rewards for customers who hit a certain spend threshold; free gifts; or different rewards for different tiers of customers?
- What value or ROI will a loyalty programme provide?
Your marketing team need to provide you with information that enables you to demonstrate to your key stakeholders the effect the programme is expected to have on your profitability and customer base, including potential expenses and expected sources of revenue, increased physical and online visits, increased spend, referrals and other behaviour changes likely to increase profit.
- Who needs to be involved?
- What are our strategy and objectives, and what does success look like?
Think about your customers, what makes them loyal? Analyse your existing data and the success of previous campaign results. Have you noticed that customers have gone on to achieve consistently higher levels of spending after being exposed to a promotional email campaign or receiving a discount voucher? What makes your customers keep coming back? If you don’t have the answers, think about running a survey to understand why your existing loyal customers keep coming back. This can then be applied and maximised within your loyalty strategy.
- What are the mechanics of the programme?
- How will the programme be managed? For example, will you do this in house or outsource it to a specialist?
- Will you offer hard or soft benefits? We recommend a mixture of both.
- What are the rules for what will/won’t be rewarded? For example, are certain product types excluded? Or, will you reward for social media interactions, and if so what types (e.g. shares/likes/comments)?
- How can customers redeem their rewards?
- Do you need to run a pilot programmes to test your idea without the cost of a full-scale programme?
By Barry Smith, Senior Consultant at Ikano Insight