It's not just the loyalty data - it's how you use it

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By: Wise Marketer Staff |

Posted on April 8, 2008

Although the number of North American conferences focusing on customer loyalty has dwindled over the past few years, IQPC's Customer Loyalty Summit in Texas, USA, provided several useful insights, according to The Wise Marketer's US contributing editor, Bill Hanifin.

Presenters from loyalty operators such as Harrah's, Home Depot, Wachovia, Neiman Marcus, JetBlue, Best Buy, and Continental Airlines contributed their views and findings on customer loyalty in today's consumer marketplace.

The basics of loyalty are clear
According to Wachovia senior vice president Tom Johnston (the conference's chairman), the basics of loyalty should be clear to all marketers by now because so much information about it has already been disseminated in the market. As a result, the event focused instead on how to extract greater value from the data collected by loyalty programmes, and how to put it to good use in ways that customers will actually notice. This, of course, included the running theme of linking loyalty data to an improved customer experience and increased customer profitability.

Over the conference's two days, speakers addressed a wide range of factors that are critical to the successful execution of a loyalty strategy, including call centre improvements, front line staff training, staff incentives, store design, branding, and of course loyalty programme metrics and measurement.

Employees of paramount importance
Matt Bowers from Harrah's started with an overview of the company's Total Rewards programme, and stressed the importance of staff training at all levels. The Home Depot backed up Bowers' assertions with a detailed explanation of how companies could build a balanced scorecard to improve their customer care operations to better support loyalty programme execution.

At the same time, IPSOS Loyalty presented a clear challenge to the Net Promoter Scoring (NPS) technique advocated by Fred Reichheld, Bain & Co, and Satmetrix. It was generally felt among conference delegates that customer loyalty is not easily attributable to any single element (e.g. a plastic card) and can also not be evaluated by asking one single question. But the debate will certainly continue.

Satisfaction's role in loyalty
Wachovia followed with a discussion on the building of loyalty within its small business customer base. The bank's definition of loyalty was: "An emotional bond formed out of a customer experience with the bank over time". Indeed, the mantra quoted by the bank's executives says that the bank must "satisfy customers while serving them so well that they become loyal".

Wachovia closely equates customer satisfaction scores with customer loyalty and so, in its regular surveys, the bank asks three key questions of its customers, and only those with the highest score on each question are considered to be loyal. The company operates a continuous survey programme, reaching out to 25,000 customers each month with a broad questionnaire, and - thanks to a careful selection process - claims a response rate of between 40% and 50% for telephone surveys with its best customers.

Wachovia also applies marketing metrics regularly, including both quantitative and qualitative elements. This discipline seems to have paid off, because the bank's customer satisfaction ratings have increased steadily since 1999 (and Wachovia has also has shown the highest improvement rate among its peers).

Embracing younger consumers
Cisco shared some new information on how it had reengineered its customer care group to engage a younger generation of consumers who don't just want an answer but who want to have flexible access to useful solutions, as well as a forum to share what they learn with other users.

The company turned its traditional call centre on its head and focused on virtual, social, and intelligence networks to help meet customer needs. The programme showed clearly how loyalty marketers may be able to engage the generation known as 'Millennials', which is growing in importance to almost all consumer-facing organisations.

Loyalty: a continuous journey
Robert Hughes from Nieman Marcus described how the company has consistently applied its customer strategy to build stronger relationships with customers. He asserted that "loyalty is a continuous journey", and has set a corporate goal to "make research actionable" in order to better address customer 'pain points', and to help relate customer loyalty to bottom line profits.

The company's founder, Stanley Marcus, was quoted as saying "Our associates make our stores come alive". Neiman Marcus put this idea into practice through a well developed staff training programme which has successfully driven increased sales productivity and created an average customer lifespan of 19 years. Having a fully commissioned sales staff and an incentive plan tied to customer satisfaction has influenced these results over many years.

At the same time, the company noted that it is now testing a new brand called 'Cusp' to appeal to a younger audience, with in online store at

Using contextual data
JetBlue Airways has also made a big impact in the US air travel market, and Bryan Jeppsen attributes much of the airline's success to the fact that it regularly surveys passengers and finds efficient ways to work with the resultant contextual data. The airline conducts some 12,000 surveys per week, along with data from over 500 customer e-mails per day. Interpreting the significance of the textual responses to questions such as "Is there anything else you'd like to tell JetBlue" is one of the keys to the airline being able to react quickly to better serve its customers' needs.

Indeed, structured data responses were described as "the what", while contextual responses are "the why" behind customer behaviour. Employing a tool that determines patterns in this data enabled JetBlue to respond quickly and appropriately to customers in the wake of its weather-related nightmare in February 2007. When the CEO stood in front of the media with a list of concerns that the airline would address, his statements were not scripted by the PR department but instead were based on an analysis of the contextual data received in the days following the incident.

Rick Ferguson, editor for, hosted a panel of innovators including KOA campgrounds, Smart Button, and Callison. After Ferguson presented the results of a recent demographic survey covering the loyalty industry, the group examined other elements of the customer experience that also influence customer behaviour.

Finally, James Damian from Best Buy explained how the company defines its loyalty strategy through consistent brand building and careful store design, all of which is intended to better respond to customers' needs and desires. The company designs stores in multiple iterations behind the scenes before launching in the public eye, with one key objective being to "make the strategy visible through the store footprint".

Interestingly, when asked about the company's Reward Zone loyalty scheme, Damian described it as just "one tool in the box" (albeit an important one because significant revenue was attributed to the programme). However, Damian's comments crystallised the overall message of the conference: "It is experience, not understanding, that changes behaviour".

Expert guidance
See The Loyalty Guide up-closeThe Loyalty Guide, our comprehensive guide to customer loyalty, explains every aspect of loyalty programmes, best practices, concepts, models and innovations, all backed up with case studies, original research, illustrations, charts, graphs, tables, and presentation material. Find out about the principles, practicalities, metrics, analysis, and bottom-line effects of loyalty, and gain the expert guidance of dozens of loyalty and relationship marketing thought-leaders, worldwide.

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