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Bill Hanifin
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If we were playing a word association game, tossing out “Loyalty” to the crowd would elicit responses “Points” or “Miles”. In a similar way, ask what business problem Loyalty is designed to solve and most people would respond “attrition” or “retention”.
Obviously, historical perspective on Loyalty Marketing programs equates the strategy to a Hammer, a well designed and reliable single purpose tool. One of the tenets of Loyalty Truth offers:
“While not every company needs a Loyalty program,
EVERY organization needs a well designed Customer Strategy”
By expanding the mandate of data driven marketing programs to embrace all that is entailed in building Customer Strategies, we’ve magically converted the Hammer into a Swiss Army Knife. Try to do that the next time you’re in the hardware store!
A properly designed Customer Strategy may or may not use a promotional currency to engage with customers. More importantly, a Customer Strategy can be designed to achieve multiple objectives including new account or customer acquisition, increased retention and spend, and may be used to support new product introduction. If you think through the definition below, you might agree that expanding your historical perspective on Loyalty Marketing to Customer Strategy has a “Loyalty 2.0” feeling about it:
Marketing strategy designed to improve and maintain profitability
across a targeted customer portfolio
while delivering a sustainable purchase experience
consumers wish to repeat™.
Loyalty programs remain an excellent tool to create and maintain customer preference and to collect data invisible from your competitors, but a new wave of innovation will be required to remain competitive in today’s market.
No business executive ever woke up in the middle of the night and said “I must have a loyalty program”. It was their business problem that interrupted a good night’s rest. Identifying specific business objectives to achieve will lead to the best strategic solution, and probably a more inclusive one than “points or miles”.
Begin to view your Loyalty program as part of a broader Customer Strategy and watch your “Hammer” transform into the more powerful Swiss Army Knife.
