The August 26 edition of The Wise Marketer offers six key elements “walking the talk” with your loyalty program so you’ll provide a positively differentiated customer experience. Not surprisingly, it all starts at the top.
“We all know the way; few actually walk it,” observed Bodhidharma, a Zen Buddhist monk. His statement is as true today as when it was made some 16 centuries ago, according to Brian Woolf of the US-based Retail Strategy Center.
Global loyalty program are all over the map in terms of practice: some are outstanding, some are good, and some are disappointing. Indeed, while we all know “the way,” few actually walk it.
Experience, discussions, observations and results tell us that “the way” has six core elements:
The CEO believes in customer attraction, satisfaction, and retention and, therefore, in measuring and building customer loyalty. The loyalty program is one of the crucial vehicles to achieve this. That’s why the CEO is the chief cheerleader for the loyalty program. And this commitment to the program is seen throughout the whole organization.
Lesson: Don’t even consider launching a loyalty program until your CEO has this attitude.
The secret of marketing is to provide a choice, not an echo. And it’s the same with loyalty programs. What are the key differences in your program when compared with your competitors’ program? Are you actively working on strengthening and highlighting those differences? If a competitor introduces a popular promotional program, do you respond with an echo, or with a choice such an alternative program or a distinct alternative variation to their program? For example, if your competitor introduces 5%-off for every $250 spent during the next 2 months, do you copy it or do you respond with 10%-off for every $400 spent during the next 10 weeks?
Lesson: Keep reminding customers of the different reasons, including your loyalty program, why they should keep shopping with you.
Can every employee explain your loyalty program to any customer, right from their first day on the job? That’s the simple “Simplicity Test.” Customers don’t seek out the store manager to ask questions about the loyalty program: they ask the nearest employee. And if that employee cannot give a simple, clear answer (and in an enthusiastic and knowledgeable way) then both the customer and the employee begin to lose faith in the program.
Lesson: Simplicity is in the mind of the customer, not in your behind-the-scenes creative marketing genius.
No matter how brilliant a loyalty program you devise, you will (and I guarantee it) want to change it over time. The degree to which it can be changed depends upon whether you have set up hard-to-reverse ‘rights and expectations’ (e.g., a 1% rebate on all purchases) or whether your offer has flexibility built-in to allow you to alter the rebate cost over time. For example, one of several flexible alternatives to the common 1%-of-purchases rebate program is to offer an equal or higher rebate on selected (and changing over time) higher-margin items around the store.
Lesson: It’s easy to give money away in a loyalty program but difficult to pull it back when economic and marketing times change.
One piece of business wisdom we should all have learned over time is that “if you can’t measure it, you can’t manage it,” and loyalty programs are no exception. Record and manage according to the metrics you want to improve once you have your program in place (for example, customer retention and defections, as well as other customer behaviors that relate directly to your key corporate goals). Your loyalty program provides unique information, so squeeze it and extract the data, then make it work for you.
Lesson: Your customer metrics are so important that they should also be an integral part of your company’s monthly management report.
We must reward both our employees and our customers: our employees for continued, positive support of the loyalty program (they need to be enthusiastic users of the program to understand it and talk it up); and our customers for presenting the card at each transaction without being prompted (by providing tangible, recognizable value for doing so).
Lesson: The idea that “behavior follows rewards” is a basic psychological truth, so we must decide on the behavior we want, among both employees and customers, and then reward it accordingly.
These are the six core elements of “the way” Is it the path your company currently walks? It is clear to all who believe in loyalty marketing. Walking the path is the challenge: making the way core to our corporate culture, to our merchandising and marketing, and to our internal measurement and performance appraisal systems. Walk that path and you will be one of the masters of global loyalty.
Are you “walking the talk” with your loyalty program? Would your customers agree?