Tag Archives: loyalty program

Removing the obstacles to customer loyalty

The most common challenges to successful customer loyalty programs can be overcome with the right solutions. Here are the five key challenges, and how marketers are finding ways to solve them.

1. Difficulty in measuring and using data

Senior management wants to know that a marketing investment is well spent. But loyalty programs cannot be measured in traditional ways. In fact, three of the top five reported challenges are measurement related. Measurement needs to take a triangulated approach, focusing on these three areas:

  • Specific changes in the customer value equation
  • Shifts in consumer value
  • Customer engagement and advocacy

Triangulation provides a view of impact from multiple angles that gives insight into performance. So, each metric needs a clear definition of success for now and the future. Measurement then becomes part of continuous loyalty loop, in which customer intelligence creates customer insights, which feed into the loyalty program and creates more customer data to start the loop again.

2. Picking the right mix of rewards and benefits

Most loyalty rewards involve discounts, but this becomes difficult to execute as everyone has the same offerings and retailers have trained consumers to look for nothing but discounts. This is a delicate tightrope act: give rewards that are too expensive or popular and the budget gets blown. Starbucks, Virgin Airlines, and National Car Rental offer just a few of the programs that earn rave reviews with customers, without breaking the bank to do it. The key to success is activating “soft benefits” that have high perceived value.

  • Look at the portfolio of hard and soft benefits
  • Assess what benefits you and your competition use today
  • Assess current business goals and objectives
  • Rate each potential proposition on alignment with goals, customer interest, operational ease, and cost
  • Test your new value proposition in a limited scale
  • Have clear time frame for go/no-go decision on roll-out

3.  Programs lack true innovation

The average customer is a member of more than 10 loyalty programs. As more and more retailers launch programs, making a splash with a new program isn’t easy. Before loyalty programs, customers would stay with their favorite retailers based primarily on price or location. Loyalty broke this inertia, giving customers a reason to shop another retailer. If faced with a choice between companies, loyalty broke the tie.

But, as more companies start programs, a new inertia has formed. Nearly 60% of consumers state they only participate in a few loyalty programs. Loyalty has become the new normal and customers need something special to truly shift their business. Meanwhile, customers feel they are getting less out of programs. About 30% of consumers feel that there is little or no value in joining a program.

Offering differentiated benefits gives customers a reason to engage. Assess the competition and do customer research to find these benefits. Carefully test to pick the winners.

4. Choosing to build, buy, or partner

To run a loyalty program, retailers face the tough decision of whether to build, buy, or partner. Two thirds of all retailers have less than four people devoted to loyalty and 20% have no one, so most firms go the partner approach.

Partnering can augment internal staff with specialized skills. Building internally gives company complete control at the expense of time and resources. Buying allows for fast deployment at the expense of future scalability. Most companies actually leverage all three tactics to some degree. Using all three tactics is needed as aspects of loyalty grow into mobile, web, social, and other channels.

Regardless of the decision on this important matter, having one person or agency ultimately accountable for the program is vital to success. Loyalty needs to have one singular goal in the organization while minimizing resource needs.

5. Marketing and operations are not on the same page

Selecting the right value propositions is an important program component. Often overlooked, ensuring execution is just as important. Customers can receive years of good interaction with a brand and program only to have it all ruined by one negative experience.

Executing a program happens on two levels: systems to identify the customer and present them with the right reward/recognition, and store operations to carry out the needed tactics. System issues are frustrating but easy to explain, while in-store issues cause more frustration.

Soft benefits are ideal because customer benefit outweighs cost. Failed execution means customers will not trust the company in the future; so, operations need to deliver on marketing promises.

Source : dmnews.com/removing-the-obstacles-to-customer-loyalty/article/276437/

How to choose the best rewards for your loyalty program

There’s no question about the importance of having a loyalty program in place in order to increase brand loyalty and maintain relationships with valuable customers. But once you’ve made the decision to implement a program, you need to decide exactly what kind of system you want to use and what type of rewards you will give out.

For restaurants, and especially fast casual and quick-serve restaurants, there are three different types of loyalty programs that are the most popular and effective: Product Frequency Program, Automatic Rewards Program and Visit Frequency Program.

Product frequency program

A product frequency program is possibly the most popular loyalty program because it rewards customers for continually purchasing a specific product. This can also be referred to as a “punch program” because rewards are given after a customer earns a certain amount of punches, with a punch being given each time the specified product is purchased. All of those “Buy 10 Get 1 Free” promotions you see are product frequency programs.

This type of loyalty program works great for businesses that offer a simple menu with one item being the most popular. For example, a smoothie restaurant could easily implement a product frequency program because most of its customers come in for a smoothie, and therefore they can easily offer “buy 10 smoothies, get one free,” and it will be a reward that their customers actually want to receive and redeem.

Automatic rewards program

Automatic rewards programs are probably better known as a “points program” because customers earn a point for each dollar they spend and then are automatically given their reward once they reach a certain spending threshold.  There are two different types of rewards that can be given once the threshold is met: a product reward or a dollar reward.

A product reward would be something like: Earn 100 points and receive a free dessert, whereas a dollar reward would be: Earn 100 points and get $10 off your next purchase.

Both rewards are attractive to consumers, so you just need to decide what makes the most sense for your business.  If there is a product you offer that people love and would want to get for free, then offer that as the reward for earning points. If consumers often spend over $10 on a meal, then maybe you should give them the $10 off reward.

It really comes down to which is going to be easier for your business to compensate for after the coupons are redeemed.  For example, do you make enough desserts to give free ones away every day? Can you afford to lose the $10 off a purchase? Once you figure out the logistics, you can easily choose which reward to offer.

Visit frequency program

The visit frequency program is almost like the product frequency and automatic rewards programs combined.  Each time a customer comes to your restaurant and makes a purchase, they are given a punch/point. Then, after a certain amount of visits, they receive their reward, which can be a product reward, dollar reward, or a discount. For example, after 10 visits you can give a customer a free dessert, $10 off their next purchasloyaltye, or 10 percent off their next purchase.

The main differentiator of the visit frequency program from the other two is that you get to decide the minimum dollar amount spent that qualifies as a visit.  In other words, you can say that a customer must spend at least $10 in order to receive their “punch” for that visit.  This helps encourage buying behavior that is more beneficial for your business.  However, when deciding on this program, it’s important to set the minimum purchase amount at a reasonable level so that customers don’t get frustrated that they are never earning punches and thus feel like it’s not worth it to try and earn the reward.

 Source : qsrweb.com

The loyalty ecosystem

In nature, ecosystems are dynamic. The denizens of an ecosystem don’t simply live peaceably side by side; they exist in symbiotic harmony. They benefit, interact with and feed each other. And to survive, ecosystems adapt to change. Because of these characteristics, an ecosystem is the perfect metaphor for a customer loyalty strategy.

High-frequency merchant environments with consumer loyalty programs — such as grocers, pharmacies and convenience-fuel retailers — are perhaps the strongest customer ecologies. They teem with customers, products and purchases, all leaving their imprint on the loyalty biosphere. Customers who use your services every week instead of once a year represent a profound opportunity to redefine how you go to market by building an ecosystem based on insight into your customers’ needs as derived from analysis of purchase behavior. To create an information and segmentation structure that makes your loyalty ecosystem come alive, consider these best practices:

1. Understand your segments-Every customer-management system starts with analysis to develop comprehensive customer insights. What are your customer segments and their current and potential value? What profitability drivers will truly impact your ROI? What categories of products do consumers buy?

2. Segment ahead of the curve - Expert analysts can take this approach a step further and build segmentation strategies by identifying changing needs in some cases, before the customer is even aware of the need. What offers can you deliver that anticipate what products a consumer might purchase for the first time? This approach creates symbiosis by returning emotional value to the customer.

3. Enhance the customer environment - Another important element of the loyalty ecosystem is the customer experience. Is your retail biosphere designed to grow the quality of your customer relationships? Needs-based segmentation offers a solution. Suppose your segmentation analysis reveals a significant index of convenience purchases. The “Time-Starved” segment makes up the lion’s share of your most valuable customers. Why not design cross-functional strategies to drive a better experience for customers who aren’t going to spend a lot of time impulse shopping?

Source : www.chiefmarketer.com

5 Mandates for B2C and B2B Loyalty Programs

Whether you’re developing a loyalty program geared to consumers or business buyers, there are critical factors you need to consider. Here are five ways to make sure your program hits the mark.

1. Deliver Clear Value

It’s not enough to offer VIP or Gold Star status to customers; it has to be crystal clear what those things mean.You might want to offer incentives for enrolling, but whatever you do, make it very evident what customers get for taking part. A gift certificate? Miles? Points toward specific goals? According to COLLOQUY, 93% of people rate the types of rewards offered as either “very important” or “somewhat important” when deciding to engage in a program. But if they don’t know what they’re getting, they’ll drop out, and re-engaging them can be difficult.

For example,American Eagle Outfitters makes it simple for customers to sign up for their loyalty program, and they do a great job of explaining the value proposition to prospective participants. They also send an email welcoming members to the program with a temporary card, a recap of the benefits and an opportunity to earn points by joining the mobile alert program.

2. Keep it Simple

Rewards quickly become unrewarding when people find it hard to participate. Does your program have tiers? What are the benefits of each, and what does it take to achieve each level? What are the limitations and exclusions? Don’t leave the rules for the fine print. If people understand what they need to do in order to take part in your program, they might actually do it. If it’s confusing, they won’t.

3. Make it Relevant for Both B2C and B2B

Don’t just focus on adding members. To get results, you need those members to actively participate. And that means making sure the bonuses and benefits you offer are tailored to the needs and interests of your participants. Once you’ve figured out what appeals to your most valuable customers, you’ll be able to customize rewards to specific segments of your audience. If you were a paper goods manufacturer, for example, you would want to consider the needs of different types of customers. Are you reaching out to consumers who buy greeting cards? Small business owners who sell stationery? Corporate clients who buy envelopes in bulk for 200 locations? Each group has different need and goals, and different motivations.

B2B loyalty programs are becoming more common, and with good reason. In the most successful programs, the benefits are tailored to the business audience. MasterCard addresses B2C and B2B in distinctly different ways. They provide a number of different credit cards, some better for consumers, others tailored for business. Each has its own rewards. For consumers, MasterCard took advantage of their sponsorship of Beyonce’s world tour and offered people the chance to experience “VIP Priceless” events such as front row seats at the concert and backstage access. For small business owners, MasterCard offers discounts and rebates on products and services that their business-minded customers want, including shipping, fuel, travel, and recruiting solutions.

4. Provide Seamless Experiences

In today’s channel-hopping world, it’s important to provide streamlined interactions with customers, and that includes giving them a variety of ways to participate in your program. A punch card for “buy 10, get one free” doesn’t do much good if people are buying online. A robust multichannel loyalty program is coordinated across online, mobile, social, email, direct mail, in stores and on the phone.A recent study by Experian Marketing Services found that 34% of the U.S. population consider themselves to be loyal to at least one brand. The study also showed that these customers are more likely to respond to mobile campaigns and to purchase products that are advertised on social media sites. These findings underscore the importance of creating loyalty programs that span the customer journey. Cross-channel experiences can drive acquisition as well. For example, Starbucks promotes their loyalty program through social media with their Tweet-a-coffee program. It encourages customers to connect their Starbucks and Twitter accounts, then “tweet a coffee to a friend,” which gives that friend a $5 Starbucks Card. Right after the launch, Starbuck raked in $180,000 in purchases by 27,000 consumers, according to a report by Keyhole.

5. Measure the Value

In order to understand how well your loyalty program is performing, you need to be able to measure the results. Begin by defining what success looks like by setting key performance indicators. Here are some typical ways to measure results:

  • Look at the raw data: How often did customers use the program? What kind of feedback do you receive about it? How many customers shared the program with friends and family?
  • Study the sales numbers: How many customers purchased products or services because of the program? What was the cost of each conversion? What was the ROI?
  • Listen to sentiment: Are customers satisfied with the experience? How connected do customers feel with your brand?

In order to get a clear picture of the success of any loyalty program, it’s important to be able to track metrics across channels and to gain an in-depth understanding of online behaviors.

Source : http://www.business2community.com/brandviews/act-on/retention-drives-revenue-5-tips-customer-loyalty-programs

McDonald’s Doesn’t Have a Loyalty Program, but It Could Use One

For McDonald’s (MCD) customers, the only reward is the food. It may be just a habit, a particular craving, or mere proximity that brings them to the Golden Arches, but no one goes because a loyalty card or, these days, an app lured them with discounts, points for free food, or other bonuses. McDonald’s doesn’t have a loyalty program yet—but it could use one.
Traffic at McDonald’s stores is declining. In the U.S., comparable restaurant sales were down 3.3. percent last quarter. The company is looking for ways to bring in more customers more frequently, and one of the things it’s considering is a new smartphone app, which would include promotional offers, mobile payment, and ordering, according to spokeswoman Becca Hary. The company declined to provide further details.
Other fast-food chains have loyalty programs. Customers at Starbucks (SBUX) can earn free drinks or food and get deals and early access to new products with My Starbucks Rewards. Subway has My Subway Card, and Panera (PNRA) has MyPanera. At Dunkin’ Donuts (DNKN), the rewards plan is called DD Perks. Taco Bell (YUM) just launched an app with exclusive app-only deals.
None of the big three burger chains—McDonald’s, Burger King (BKW), or Wendy’s(WEN)—has rolled out a national loyalty program.

McDonald's
“Fast food has always lagged behind in adopting and adapting to technology,” says Darren Tristano, executive vice president of restaurant industry researcher Technomic in an e-mail. It’s expensive, and restaurant margins are thin.
Yet loyalty programs have proven successful in luring small spenders in other industries, such as casinos. Harrah’s (CZR), for example, introduced a Total Rewards program to “let even small gamblers get treated like movie stars in Vegas,” as Bloomberg Business Week reported in 2003.The cards collect data on the gambling behaviours of customers—such as elderly slot players who were largely neglected but make more money for Harrah’s than any other demographic—and offers them such target benefits as free meals, shows, rooms, and merchandise. By 2010, the program was “the linchpin of Harrah’s success.”

Source : http://www.businessweek.com/articles