Posted by Becky Carroll on December 14, 2006
As promised last week, today I am posting my top tips for setting up and managing a customer loyalty program. Loyalty programs are, unfortunately, a dime a dozen these days. It takes something special to make a loyalty “program” stand out.
Let me briefly define what I mean by a loyalty program. There are certainly all those plastic/paper cards we carry in our wallets or on our key chains that are one type of loyalty program. I have been experimenting with my local grocery store to see how well this works by remaining anonymous on their card application (did you know you can do that?). I also have another card with my info so I can compare offers. I am not really interested in getting coupons from them, as I can get most of their discounts through showing the card. It is my belief that these programs are not effective unless the information gathered from the customer is used to add value to the customer’s experience. If you are not going to do something for me, why would I want to give you my information? Plus, you are just taking up space on your servers with worthless information if you are not using it appropriately. See Kevin Hillstrom’s blog MineThatData for more great food for thought (get it?) on multichannel and database marketing. I like his customer-focused thinking.
Tip 1 for loyalty programs: Make sure your program adds value to the customer experience, and be clear on what that value is.
Then there are those programs that we sign up for, such as frequent flier/traveller/stay-er programs, where one can earn (theoretically) free trips, free stays, etc. Southwest Airlines has a very simple, straightforward program that uses flight segments rather than miles. It is easy to use and easy to redeem; they even keep track of all your Rapid Rewards for you if you have misplaced the award certificates. They also work to engage their loyalty program customers with things like birthday cards and thank-you cards for your business. My husband has been a Rapid Rewards member for quite some time, and yesterday he received a 10-year anniversary card from Southwest (it looked like a wedding anniversary card, talking about “walking down the aisle”). It was accompanied by a coupon for $20 off an Alamo car rental. My husband received this card with mixed feelings. It was great that they recognized his longevity with Southwest, as well as the fact that he usually books a rental car through their website. However, very seldom does he book Alamo; he usually books Dollar. If Southwest had taken a little bit of time and effort to review their customer data, they would have found that out and sent him a coupon that mattered to him, rather than their current “partner campaign”.
Tip 2: Use your customer insight to create relevant offers for your customers in order to differentiate your program from others and create customer delight. It should be for their convenience, not yours!
Finally, there are those loyalty programs that are not really as much of a program as they are a way of doing business for a company. This blog, Customers Rock!, focuses a lot on the latter type of customer strategies, where customers are at the core of the company. See C. B. Whittemore’s blog post from Flooring the Consumer on relentless customer focus for a great example. (BTW, this is one of the blogs I recommended through my link-love post yesterday!) Hiring a Customers Rock! attitude in employees is a key to this program, as well as the appropriate measures to ensure an organized effort. Random acts of “CRM” will not further your customer cause!
Tip 3: Be prepared to carry your loyalty program, or customer strategy, through to the end. It may be worse to start a program, set customer expectations for a great “club”, then stop after awhile, than never to have started a program at all.
Add your own loyalty program tips, and I will publish them in a future post.