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The Global Resource for Loyalty Marketers

Insight: The foundational elements of customer loyalty

It's always gratifying to find a mainstream media outlet report on the loyalty industry and get it right. The latest overview comes courtesy of reporter Alina Tegend in the New York Times, who underscores a few fundamental truths about earning customer loyalty through the mechanism of a loyalty programme: customers must feel both rewarded and recognised; sucessful programmes deliver high perceived value; successful programmes leverage customer data to deliver personalised, differentiated experiences; and programmes must evolve to survive. These are important lessons that even the most seasoned loyalty marketers would do well to revisit from time to time.

We at the Wise Marketer are here to help, time-starved executive, so allow us to highlight a few money quotes in the tl;dr version the New York Times article.

On the importance of leveraging programme data:

"'If somebody were to ask me if I should start a loyalty programme, I would say they need to manage it right,' said Yuping LiuThompkins, a professor of marketing at the Strome College of Business at Old Dominion University. It's not just about gaining new customers, she said, but crucially, about effectively using the important data you receive from those customers. It's about persuading people not only to buy more, she said, but to change their behavior and habits - and to share that with friends and family."

On the importance of soft benefits from Forrester's Emily Collins, one of the most astute observers of the customer loyalty space:

"Research also shows that while people say discounts are important, they also 'overwhelmingly say they want special treatment and offers not available to others in a loyalty programme,' [Forrester's Emily] Collins said. 'They come for the perks, but they stay for the experience.'”

On the importance of perceived value, from Brian Gregg, a partner at McKinsey and Company:

"The beauty industry, in general, has successfully developed one of the crucial elements of any loyalty programme, Mr. Gregg said: that 'the perceived value to the customer is greater than the cost to the company.' For instance, he said, the movie theatre industry is trying out programmes that give loyal customers early access to movie trailers, a low­-cost way to make film buffs feel special."

These points are among the foundational elements of a successful customer strategy, and they bear repeating. The entire New York Times article is worth reading; check it out here.

-Rick Ferguson



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