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Loyalty 201 – Enter Through the Narrow Gate

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Data driven marketing programs which unite tangible rewards and special benefits are meant to change behavior. And the outcome of the behavior change should render a business benefit for the company sponsoring the program and create feelings of affinity and goodwill from the people whose behavior changed towards the sponsoring outfit.

Practitioners call the resulting schema a Loyalty Program. if you prefer, you can call it a Rewards Program, Incentive Program, or Sales Performance Program. The name is less important than the definition. You could call it a “mileage give-away program” and I wouldn’t care (though that is a really awkward name that will not win you any awards).

I would care greatly if you commence the slide down the loyalty slippery slope by allowing “margin cannibalization” to sap confidence from your mission or think you can offer rewards to customers which you engineer to be unredeemable, whether through program rules or by the reward structure itself. These are characteristics of poorly designed programs, not the genre itself.

The days are gone when any customer will be tricked, bribed, or tempted into any behavior change that will benefit your business long enough to reach annual targets. Short term promotions meant to trigger impulse purchases or to shift share from a competitor will have effect until the promotion expires.

If you are content to string together multiple promotions, discounts, rebates, and give-aways and call it a marketing strategy, then you will find yourself running on a treadmill without a pause button. Stop the promos & you risk losing revenues and market share.

Successful loyalty programs are being more tightly integrated into Customer Experience than ever. If you can establish an in-store relationship worth preserving in the eyes of your customer, you can reinforce it with the loyalty program and leverage it to achieve multiple business objectives including acquisition, cross-sell, and retention. Without this integration, you risk the loyalty program being evaluated as a subset of price and more easily tossed aside as the result of a poor service interaction.

Some customers want to talk to you, others don’t. A well structured and executed Loyalty program provides the platform for the boisterous to become advocates and the shy to at least voice an opinion. Why pay money for a research panel when you can solicit candid opinions from those who are interacting with you and a have a factual basis for their praise or criticism? Surveying those whose level of interaction can’t be documented quantitatively is a gauge of brand awareness but not much more.

Put on your consumer hat. You will come to understand that Loyalty Programs should not recklessly collect data and let it sit idle or be used to support invasive marketing. Loyalty done right encourages behaviors which are profitable for the business and positive for the consumer. If any behaviors encouraged are harmful or have negative impact on the customer, throw it out of your offer matrix.

As we redefine Loyalty, we should take the high road. Agreement on business objectives is the right starting point, and filtering behavior change with your customer hat on will lead to value proposition creation that will stand the test of time.

You’ll notice that I have said nothing here of points or financial liability. That’s because Loyalty 201 can be executed using tangible benefits beyond points, and new avenues of cost-sharing are being explored every day to keep ROI in the conversation.

Walk yourself through the tenets of Loyalty 201 above and, if your program varies in one or more areas, consider it time for some tweaking if not a redesign.

It’s so simple. As the Good Book says, “wide is the road that leads to destruction, but small is the gate and narrow the road that leads to life (for this metaphor, success with your customers). Scripture also says of the narrow gate that “only a few find it” – that doesn’t have to be the case in Loyalty Marketing.

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