Throughout the world, Loyalty offerings – in a variety of shapes and forms – are playing a significant part of many organizations’ marketing and communications strategies. In many industries, having a customer loyalty program is nearly an expectation rather than an optional part of the marketing mix.
By Graeme Thomson
I have a colleague in the UK who likes to remind anyone within listening range that “too many loyalty programs were designed in a competitor’s boardroom”. In my experience working with clients in both B2C and B2B sectors, that is exactly the case. These are what we call “Lazy Loyalty” programs. Programs of this ilk can be identified by three key observations:
- Too little strategic thought was given to its design and economics.
- An insufficient connection was made between program design and corporate objectives.
- More focus seems to be given to short term “pop” rather than long-term sustainability.
The results of Lazy Loyalty programs, as you might expect, are almost always lackluster. But there’s a bigger risk for brands than missing the mark on first-phase objectives. A disillusioned program member is a risk any organization can ill afford. Ironically, a weakly constructed (or poorly executed) program provides your customer with the perfect excuse to walk away and go straight to the competition. How sad it is that a marketing program originally designed to create a strong brand between customer and brand has, in effect, accomplished the opposite.
Invest in the Starting Point
The initial research and investment which must go into a well-designed loyalty program prior to its launch can easily be deprioritized by a rush-to-market approach, thus compromising the very foundation of the effort. Other organizational influences can further hamper plans to create an effective program. The end-result is to risk undermining program potential, possibly even damaging the sponsor’s brand.
Loyalty program design and execution can be weakened by any number of factors:
- A non-supportive company management
- Change in personnel managing the program
- Sponsor failing to capitalize on the data collection to personalize communications
- Weak or non-existent program analytics and benchmarking
- Failure to regularly review the program in pursuit of continuous improvement
- Lack of ongoing innovation to enhance the program’s positioning
- Failure to correct a value proposition perceived by customers as “weak”.
Great Program Management
Due to resource allocation issues, organizations that elect to manage their loyalty offerings internally can face critical challenges to operational accountability and performance. Changes in personnel, lack of resource to keep up with consumer purchase trends, and a diminishing sense 0f accountability over time, can place even the best-designed programs at risk of becoming “lazy”.
Of course, these same challenges apply to all loyalty programs regardless of where they are managed. For example, loyalty programs managed by outside providers carry their own set of risks, though best-in-class loyalty providers will ensure the program is delivering on all levels, while remaining attentive to implementing ongoing “enhancements” at every given opportunity.
The bottom line? No matter the operational model chosen, there should always be a highly motivated, engaged, and skilled set of hands at the helm of any loyalty offering to ensure long-term success.
An effective loyalty offering should be guided by an operational plan that addresses each step in the loyalty “value chain”, including Enrollment, Data Collection and Management, Member Communications, Value Proposition refreshment, multi-channel access, and a strong reporting and analytics suite.
Possibly the greatest challenge to keeping your loyalty program anything but “Lazy” is to remember the human element of all we do as marketers. Our customers are much more than “targets” or “segments”, they are social beings who track their engagement with your brand as well as each other. Whenever your team or your loyalty provider seems to be losing focus on the principal elements of program design that motivates customers to take action, trouble is on the horizon.
Attention to the dynamics of human interactions with your brand is vitally important to success, and has to woven-in throughout the end-to-end processes governing acquisition, lifecycle growth and retention strategies. Exercise these program design “muscles” and your program will never become lazy.