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Article Loyalty Strategy

Picking a Loyalty Program: The 1st Question

 

Loyalty programs are misnamed — because they are usually not entirely about loyalty. They’re more about customer engagement, influencing behavior and, increasingly, gathering customer data.

 

These days, more often than not, the only programs that get approval from management teams are multi-dimensional ROI opportunities — and justifiably so. Resources are limited and the more angles by which an investment has potential to impact the business, the better it is as a ‘bet’.


So what does that have to do with the original point: making a decision about a loyalty program?

After so many years of business management and entrepreneurship, I’m a pretty practical guy when it comes to advising companies. I don’t like to waste executive time (or my own) with program ideas that end up in the ‘that dog won’t hunt’ category of abandoned ideas.

 

In this context, that means I recognize the real reason why  many businesses don’t have loyalty programs.  It's because the executives can’t convince themselves and other key decision makers of their ROI potential.

 

So the first question I ask when someone says they’re deciding about adding or changing a loyalty program for their business:


What customer focused decisions are you having the most trouble making?

Strange question? Not really.

 

Companies dealings with their customers are often defined by ‘blurry vision’ — and lack of complete understanding of the customer and their preferences. Most customer centric decisions are made in the shadow of that fuzzy understanding.

 

Many times the real ‘juice’ in loyalty programs is the data they generate. They represent a time lapsed view of individual, repeat customers and allows testing of everything from time based promotions to rewards and many things in between.

 

The key thing is they have to be designed with that data gathering in mind (not simply setup and ‘take whatever you get on the data’ side). Understanding and managing to all the ROI opportunities is the key to successful ‘loyalty programs’.


Back to the original point:

The starting point for assessing a loyalty program is to consider its ability to impact business decisions — with new data about customer preferences and behavior.

 

Starting from a list of customer centric decisions that your leadership team is having trouble making is the ideal way to:

  1. Define the interactive dimensions of (how and when customers interact with your loyalty program)
  2. Getting the program specifications right
  3. Choosing the right platform(s), partners (vendors) or technology to manage your loyalty program interactions with customers.

 

It can’t be emphasized enough that your loyalty program design must align with all the potential impact (ROI) areas — especially the data gathering and decision support opportunities. Failure to get that right at the beginning will leave a lot of ROI opportunity behind and render the impact of your loyalty program far less than it could have been.

Nov 27, 2013  
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