On the Sixth Day of Loyalty Marketing Nirvana: Assess the Total Cost of the Program

We all want to achieve the highest level of success possible, and with loyalty marketing initiatives requiring significant planning to complete the journey, each step is critical. Missing a step could mean failure, but hitting your stride as you develop your rewards program can help your business reach new heights.

Calculating Total Cost of Your Loyalty Program

If you’ve been following along with our series, you’ve already generated and validated your best ideas and earned the necessary consensus. To continue with the journey to loyalty marketing nirvana, we must now calculate the true cost of the program.

As noted by Shawn Turner in his article “Loyalty programs are worth the cost,” the hotel industry is one that has seen a significant ROI despite high initial investment.

So, how can you calculate the total cost of your loyalty initiatives and ensure your business booms rather than busts? Considering the size and scope of the program, upfront costs, ongoing costs, technology, marketing, and administration, even the most seasoned business veteran’s head might start spinning. However, breaking up the key costs into smaller pieces will help.

Here are the key considerations:

  • How big is the program?
  • How much are upfront costs, such as initial technology and supplies?
  • What will be the ongoing costs, such as a monthly subscription program and maintaining supplies?
  • Will your business need any new technology or training?
  • How much will you market and upsell your new incentive reward program?
  • Will you need additional staff to ensure the administration of the program is covered?

Answer each of these questions individually, and by the end you will have calculated the true cost of your program. As an added bonus, if you’ve been following our 8 Days to Loyalty Marketing Nirvana, you will have also developed a loyalty program that should reflect a great ROI. We’ll look to calculate that in our next post.

Would you like more help determining the total cost of a loyalty program? Our experts are here to help you reach new heights. Tweet us @TIBCO using the hashtag #LoyaltyLab.

Customer Engagement Requires Knowing Your Crowd

By Jeanne Roué Taylor

How well do you know your customers? While most brands would say they know their ideal shopper, how many can break down their customer engagement into finely tuned segments based on analytics? Some can, but too many are still behind the curve when it comes to having the loyalty platform to gather data, visualize and discover patterns of people and behaviors, and respond with the right engagement at the right time. Having a high level of customer intimacy enables right-time marketing and it’s within reach of most businesses (learn about right-time marketing in this whitepaper). We’ve entered a data-rich age where there are fewer and fewer excuses for not knowing your customer crowd.

How to Know Your Crowd

For starters, every customer has unique attributes that we refer to as their characteristics. That set of information includes permanent things like gender and age, but also includes things like past history of interaction and purchases that paint a clearer picture than simple demographics. While age, gender, affluence, and other factors give us broad stroke indicators of buying propensity, finely tuned segmentation requires a richer set of information than traditional groupings.

The second aspect of knowing your crowd is tightly coupled to how your customers communicate with you, which we refer to as channel. These are the pathways of interaction preferred by your audience, and getting the channel right is the difference between having a seamless conversation and being intrusive. Brands that can’t listen and respond across the many, sometimes simultaneous, channels of today’s marketing can’t say they truly know their customer.

The third aspect of knowing your customer is having a context for each moment of interaction. Knowing whether a customer is currently in the act of shopping, at the time of purchase, or just in the information-gathering phase has a strong effect on what interactions are most appropriate and what the timing should be for engagement.

Characteristics, channel and context together are what define truly knowing your customer crowd. Without them, your ability to increase intimacy, gain loyalty, and increase total lifetime value are negatively impacted.

Watch the webinar on right time marketing and learn how to use characteristics, channel and context to determine the best time to market.

Forrester and the Road Map to Intelligent Loyalty

By Jeanne Roué Taylor

Forrester’s Emily Collins recently published Build a Road Map to Intelligent Loyalty – a report that spotlights three maturity stages which clearly define the challenges of today’s customer loyalty programs. For those in the right-time marketing business, intelligent customer loyalty is the secret to significantly better customer engagement.

Customer loyalty road map

Foundational Planning – Setting in place the building blocks of customer loyalty that involve identifying objectives, getting organizational alignment, and establishing what the organization will do for people, process, and technology.

Programmatic Alignment – Executing the plan for intelligence-driven customer loyalty including requirements for strategy, data, customer intelligence, offer management, and measurement.

Intelligent Integration and Automation – Leveraging customer intelligence across loyalty program data to both optimize their program and impact the business strategy.

Collins also asserts that organizations need to base their program optimization on customer understanding as a way to deliver differentiated experiences, hone offers, and constantly improve communications. She specifically calls out building real-time loyalty capabilities that include location and social data as a key part of refining offer management, targeting, and relevance.

Growing Up

Collins is absolutely right and getting to the highest maturity stage is all about having a platform approach to accomplish what she is stressing. Without a loyalty platform, each of these maturity steps would mean performing a significant reinvention of the loyalty wheel. Simply put: It would be very wasteful.

A flexible, open platform offers the following at a minimum:

  • Common strategies used across customer loyalty marketing that can be modified, improved, and augmented.
  • Data models that give a big head start on what you’ll need, but don’t lock down the sources or destinations of data.
  • Customer contextual information to look for and incorporate (location, weather, etc.) without limiting the future of undiscovered resources.
  • Typical offers and interaction points, but an ability to expand and get more granular as maturity and market increases.
  • Optimization tools and metrics that constantly improve the system in the moment and allow transparency into what’s working and what’s not.

Not every loyalty platform is ready to offer this kind of head start. Learn more about the kind of capabilities and results that we see from clients taking a loyalty platform approach in this webinar and whitepaper on right-time marketing.

Customer Loyalty = Relevancy, Consistency and Control

By Jeanne Roué Taylor

Learn more in our upcoming webinar, Real-Time Marketing vs Right-Time Marketing, on 7/18.

It’s clear that in the past few years we’ve “discovered” loyalty programs all over again. Once the stuff of hotels, airlines, and some retailers, customer loyalty programs seem to have no boundaries today as everyone gets into the game.  But like many things that become ubiquitous, the original meaning and value of customer loyalty gets lost in the rush to look like everyone else.

Customer loyalty on scrabble board

To meet the real goals of customer loyalty, brands need a few things that are a bit more nuanced than punch cards and points. Customer loyalty programs are about delivering more contextual and relevant engagement to customers, more consistent messaging across multiple channels, and providing greater control or convenience to the customer.

Relevancy

Few things catch the customer’s attention more than relevance.

I take that back … nothing catches the customer’s attention more than relevance. There are two halves to being relevant: cutting through the noise in the marketplace to deliver what matters in a clear voice, and helping your customer discover information and choices they weren’t aware they wanted.

If your efforts are lost in the background noise, the relevance of your message doesn’t matter. Likewise, if your only goal is to ask the customer what they want, you’ve brought nothing but subservience. Successful relevance comes from helping the customer discover their own preferences and anticipating what they’ll need.

Consistency

A well-designed customer loyalty program has consistency and a good measure of predictability. That doesn’t mean that an occasional surprise and delight isn’t a great idea, but the day-to-day experience of the customer should create a trust in the brand’s ability to deliver and a sense that the brand has a well-thought-out strategy.

Web apps that constantly shift, choices that appear and then are gone, and other quick changes convey a lack of respect for the customer’s expectations. Dependable, well-crafted interfaces to your brand, whether Web, mobile or your people, are the delivery tools for consistency.

Customer Control

Customer loyalty happens when customers have great experiences with a brand that bonds with them on an emotional level. A big part of that positive experience comes from the feeling that the brand understands their needs, and respects their right to choose things like the type, channel, and timing of communication, and even the reward they receive.

Allowing customers to express preferences and participate in the structure of the customer loyalty program is the easiest way to offer meaningful control; while 99% may choose a discount or a freebie as their reward, the simple fact of offering choices is as important as the choices themselves.

These three concepts — relevancy, consistency, and customer control — form the basis for great customer loyalty programs because together they create the twin bonds of trust and emotional attachment.

Customer Loyalty: Time to Earn a Return On Relationship™

by Jeanne Roué-Taylor

These days, customer loyalty is far more than points and rewards. In fact, true customer loyalty is about earning trust in a way that allows that customer relationship to be managed toward greater value like any other business asset. Author and Forbes Top Social Media Influencer Ted Rubin champions this idea in his book Return on Relationship:
Customer Loyalty to Customer Relationship Management
“Return on Relationship™ (ROR), simply put, is the value that is accrued by a person or brand due to nurturing a relationship, whereas ROI is simple dollars and cents. ROR is the value (both perceived and real) that will accrue over time through loyalty, recommendations and sharing, and is used to define and educate companies, brands, and people about the importance of creating authentic connection, interaction, and engagement.”

We take Ted’s expertise in customer relationship management and the return on relationship very seriously. Customer loyalty programs need to have tangible business outcomes that require a deep understanding of the customer. Those outcomes include:

•    Efficiency – Loyal customers cost far less to recapture and form a conduit to access the loyalty of their network through brand advocacy. The value of customer loyalty is not just in higher sales but also in the ripple effect they have on others.

•    Forgiveness – No one is perfect 100% of the time, and a loyal customer is far more likely to forgive minor missteps and support a brand through thick and thin.

•    Greater Lifetime Value – Customers loyal to a brand are worth 10 times the value of a customer who shops for convenience or price.

•    Social Insurance – In Ted’s words, this is “a band of ‘dynamic advocates’, always ready, willing and able to come to your defense in time of crisis or simply when you’re in need of support.” He is always quick to point out that this outcome has incredible ROI.

•    Energized Workforce – Stirring your customers to brand loyalty has a powerful effect on your own people, as that customer loyalty becomes powerful positive feedback that energizes your staff and makes their jobs more meaningful.

Gaining that deep understanding means having a 360-degree view of the customer’s history with the brand, their personal preferences for how and when to engage, and the contextual circumstances of when they interact with the brand. As consumers become more mobile and social, and demand control of the moments of their engagement, the challenge is synthesizing widening event-streams in real-time (learn more in this whitepaper on event-driven marketing). Is your brand up to the test?

Along with Loyalty Lab’s Matt Elders, Ted is presenting on Tuesday, June 18th at the CRMC Conference in Chicago, where they will discuss customer loyalty management. Learn more in this webinar and whitepaper.

Learn more about Ted Rubin’s book, Return on Relationship, and more about him on his blog and at CollectiveBias.com. You can follow him on Twitter @tedrubin and @R_onR.

Real-Time Marketing: We Shop When We Choose and Want Our Rewards the Same Way

by Jeanne Roué-Taylor

I was surprised today when I discovered that a choice of reward for my credit card loyalty programwas credit toward shopping on Amazon.com. When I made the choice, I found out I had credit on the retailer’s site, available to be used immediately – which was a great real-time marketing effort..

Real-time marketing and waiting for rewards Before I made this simple discovery, I thought I had to order merchandise or gift cards and wait an indeterminate amount of time for their arrival. After all, we’ve been trained that free doesn’t necessarily come in express mail and rarely right away. This real-time marketing is part of a rapidly growing trend where consumers can receive their loyalty rewards as near or far from real-time as it gets.

Right-Time Rewards

It makes sense that right-time rewards are just a part of delivering great customer loyalty programs with real-time marketing. Asking customers to delay gratification to a time of your choosing has the effect of making rewards less tangible. Anything, including choice, timing or complexity, that stands between reward and redemption also stands in the way of creating consumer habits that benefit the brand. Our parents taught us that patience is a virtue, but does that apply to loyalty?

Marshmallows and Mobile Devices

As much as delayed gratification is a virtue in society, brought to life in the famous Stanford Marshmallow Test, delaying or giving tone-deaf consumer gratification is not a virtuous situation for the brand.

Taking this a step further, the perception of what constitutes ‘right’ is being rewritten by the mobile loyalty revolution and real-time marketing, as consumers have the ability to receive reward notifications or use rewards they’ve earned on the go, anywhere and everywhere. This makes things really interesting as brands can compete on finding innovative ways to incent and reward mobile commerce behaviors in just the right moments.

In a July 2012 Aberdeen Report, analysts state that incorporating real-time rewards into mobile loyalty messaging allows retailers to generate a two-way dialogue with their customers. The report also points out that real-time marketing rewards give retailers and brands a way to track the success of a campaign in the moment and to make corrective changes as needed.

Let’s Get Physical

Where mobile loyalty really turns things up is in capturing as much of the customer’s physical circumstances as possible so that interaction, including rewards, can have the proper context. A mobile users location is valuable information, as that determines time of day, proximity to a store, weather and more. If that ambient context can be blended with data about past behaviors, it potentially takes on much greater value in deciding real-time marketing efforts. In effect, it brings together the physical world of the consumer with the digital world of the loyalty program.

The merging of the physical and digital worlds in right-time is real-time marketing nirvana. It represents an opportunity for a brand to be present in the moment a decision is being made: a decision to buy an item or to enter a store, including a competitor’s location. Those moments are increasingly becoming the key to loyalty success.

Are Your Customers Trapped in Your Loyalty Programs?

by Jeanne Roué-Taylor

Loyalty is a red-hot topic for many industries, but unlike cloud, social, or mobile, loyalty programs have been around for decades.

Still, many loyalty programs are simply not delivering what they should. If not dynamic and individualized, they are very likely suffering from diminishing returns and getting lost in the noise of other ubiquitous loyalty programs.

While ubiquity is an issue, there’s something worse than being lost in the shuffle. There are loyalty programs, typically in the industries that have been in the loyalty game the longest, that incent behavior without creating a positive experience for the customer. Think of airlines and hotels and you have great examples of plenty of repeat business from customers who aren’t truly fans of a brand.

The Walker Loyalty Matrix

Loyalty program matrix for customer categories

Walker is a well-known customer intelligence consulting firm that put together a Loyalty Matrix, which is comprised of four quadrants of loyalty. Walker’s matrix lays out the argument that poorly designed or deployed loyalty programs trap customers and may only seem to be working.

In reality, only the truly loyal customer who has a great attitude, combined with favorable behaviors (e.g. repeat business, advocacy), has high value and low risk for the brand.

Creating the truly loyal

The customers who bring the most value for a brand are in the upper right of the Loyalty Matrix. The truly loyal are already in the ideal category, but need to be continually surprised and delighted if they’re to stay in that place. The accessible customer just needs to be encouraged to think of a brand first and to develop habits that make them truly loyal. The trapped can be moved to truly loyal by finding ways to surprise and delight based on their individual tastes and preferences (this whitepaper on customer loyalty management explains how).

What about the high risk? Before deciding to invest in high risk customers—those who have the combination of a poor attitude toward the brand and are unlikely customers—a brand should focus on the other three quadrants and get the loyalty program working first before reaching out to the hardest ones to reach.

The Walker Matrix with this added insight looks like this:

Walker loyalty matrix + added insight

Your organization has the opportunity to capitalize on this plan, but it may involve starting over or building on to your existing loyalty program. The value, though, outweighs the cost of becoming less and less relevant as your competitors move forward.

I Know What You Did in Aisle 5

by Jeanne Roué-Taylor

Indoor mapping of consumer location is the latest arrow in the quiver of the retail marketer. When marketers know where things are happening, they can develop interesting patterns for where to put resources like people, signage and information technology. Geolocation also provides the remarkable ability to spot the patterns that predict what to expect from consumers, and can be tested and continuously refined based on effectiveness and cost.

Marketers can also send messages directly to the consumer based on where they are in that very moment. They can say, “Hey, you were in Aisle 5 and showed interest in that new phone—here’s an offer for 10% off.”

Service versus stalking

But where does it start to look like stalking and less like helpful service? The difference between creepy and convenience is found in whether consumers are knowingly and willingly sharing details about their path through the store, mall or city, and how long they spend in any one spot. When they’re not agreeing to this level of data collection and use, the outcome looks much more like Big Brother.

Pretty soon, they’re not agreeing to share their location and turning off that app that tracks their location. Who wants that?

Loyalty to the rescue

There is a simple way to make the same information useful both for prediction and messaging. Loyalty programs are the permission that consumers give because they see the benefit of having a closer, more open relationship with the seller. Anyone considering geolocation software as a way to get closer to the shopping cart has to first take into consideration the permission required to stay above the creepy line.

It is that easy. Loyalty programs are the de-creeping of big data and the answer not just to today’s monitoring and analytics tools, like geolocation technology, but also to what’s certainly coming in the not-so-distant future.

Learn more about the tools and technologies that are helping to reimagine loyalty marketing in this webinar.

 

Real-Time Marketing or Right-Time Marketing?

by Ted Rubin

Webinar 7/18 – sign up now! Right-Time Marketing vs Real-Time Marketing

Real-time marketing is all the rage, though as TIBCO Loyalty Lab’s David Rosen is quick to point out, brands really need to be focused on right-time marketing. “The speed and reaction of marketing needs to be relevant when the consumer is discovering, shopping or sharing,” he said.

Brands need to act with relevance and timeliness without crossing over into creepiness, Rosen warned. “You need to have customers’ permission to collect data and contact them in the time of decision-making. When that relationship is within a loyalty program, it’s far less creepy,” he explained. I agree because when the relationship exists, and it is documented via membership, the consumer feels a connection that otherwise may not exist.

Loyalty and rewards may be the first thing to get right first, he suggests, noting that “…it creates the permission-based relationship between a brand and its consumers.” There’s a value exchange there, he explained; customers have consented and contributed to the brand-consumer relationship. This is a great point because in many ways it makes it easier for the marketer than initially spending time on relationship building without a guarantee the C-suite often requires to fund relationship building.

The collection and analysis of the data available in a loyalty relationship allows marketers an edge in real-time marketing, with greater insight into which messages or offers are most likely to influence a customer in that critical moment. But keep in mind… data and analytics can’t replace judgment. Along with data, be sure to let judgement, learning, inspiration be your guides, not simply numbers.

Simple, Compelling Offers for the Win

The future of offers and real-time marketing is simplicity, according to Rosen. “The best rewards program is simple enough that any employee can describe it. It’s compelling enough that people will naturally want to sign up,” he said, noting that Sports Authority is a perfect example. They offer 5% back on all purchases, an offer everyone can comprehend and appreciate. It’s simple to use and doesn’t require that the customer understand a complex spend and earn program. I find this so incredibly important… ease of use and participation is key!

“If you can achieve high rates for enrollment and out of the gate, you’ll get immediate attention from senior management. If management doesn’t care, you don’t get buy-in and won’t have their support and budget to effectively run your program,” Rosen warned. Simple, compelling offers appeal to customers and can win the support of internal decision-makers.

Marketers are realizing the potential of next generation marketing tactics and tools, such as game mechanics, to essentially stimulate activity, add an element of fun, and change people’s behaviors in different ways. Game elements also help to cement the relationship by keep people involved and engaged.

“In this realm, you’ll see offers like group rewards, where consumers enter as a group to win prizes,” Rosen explained. “Retailers can link a number of behaviors and get consumers to accomplish certain tasks, ie: wearing a certain product and having a picture taken and posted to Instagram.”

Communication = Relationship Management

Better communication with loyalty program members means much more than simply delivering the content they want in a format they prefer. Brands needs to use the information gleaned from the program and other data available to them—through the website, email marketing, social channels and in-store—in order to effectively manage their customer relationships. When your customers are engaging via loyalty initiatives you have the opportunity to interact and engage them on a more personal level.

Are your customers shopping online, making returns, opening or responding to emails, or taking other actions from which you can draw insight?

Customers have come to expect that brands will deliver messages and offers relevant to their needs. This is the power of real-time marketing—the ability to act almost instantly on customer insights. Easing communication means understanding the needs of each customer and communicating the right message to them, at the right time.

It’s so important to keep in mind that right-time marketing means making a connection that goes beyond simply time and place, but takes it a step further and builds the connection… and therefore the relationship. Consumers desperately want to feel heard, connected, and valued, so remember to take it beyond the simple offer to engage and build Return on Relationship.

Analytics

Information has exploded, between the type of information we keep stored in databases —such as past purchasing behavior or past flight behavior—and the types of insights gleaned from activities happening in real time. “Customer loyalty marketing is not really marketing to people in real time, but using events, happenings, behaviors that are happening in real-time in order to very quickly make decisions about what to do next,” Rosen explained.

Analytics are critical for taking these masses of real-time and stored (historical) data and identifying patterns, in order to determine what to do next.

“The other piece of analytics that is incredibly compelling is that it gives the creative marketer the ability to be more creative,” Rosen explained. “You don’t have to get it right. You just need to have a great idea that it testable. If you have a great idea, you can make a moderate investment and put it in front of a limited amount of consumers and test that; you can measure the impact it had on people.” Great analytics takes away the risk of failure, he noted. Again I will add that analytics can only get you so far, it is easy to interpret data to mean what you are looking to hear, so be sure to let judgement reign.

Powerful reporting helps communicate the value of the program across the organization, not just to senior management, but across other teams, logistics partners, creative partners, etc. Dashboards, reporting and success metrics have become incredibly powerful and are critical for customer loyalty management.

Rosen’s recommendations are designed to help marketers move beyond the traditional loyalty program/offers model, to a relationship-based, mutually rewarding customer loyalty marketing solution. So use the all-important data, but remember the value in the data is in deepening the relationship connection.

“The whole idea is, don’t overcomplicate things,” Rosen advised. “Create a simple program with a compelling hook—this will become your canvas for testing and refining these other amazing things. That doesn’t mean it’s so vanilla people won’t sign up. But once you have that permission-based relationship with your customers, you can really do anything if you’re a good marketer.”

How effective is your brand at real-time marketing, using current and historical insights to influence purchasing behavior at the right time, in the proper channel, and building true relationships at the same time? Feel free to share your thoughts in the comments.

Hear more from David on right-time marketing and reimagining loyalty in the webinar, Customer Loyalty Management: Marrying the Art & Science of Loyalty.

Read more by Ted on his blog, and follow him @tedrubin and @R_onR.

Finding the Holy Grail of Marketing

by Jeanne Roué-Taylor

The remarkable amount of change in the consumer world is ushering in a new definition of loyalty. What have long been static programs of points and plastic cards are becoming dynamic, individualized and much, much more engaging.

The old way of simple ledgers and confusing redemption schemes was a fundamentally flawed proposition. Customers were able to accumulate points but struggled to keep track of and gain real value in return. Something had to change.

Enter Customer Loyalty Management

Customer Loyalty Management is the new, holistic approach to driving higher levels of loyalty to brands. It puts a focus on what have emerged as the four ‘pillars’ of loyalty:

  • Loyalty programs
  • Wider event streams
  • Marketer-driven relationship marketing
  • Test & learn

Each of these four is key to finding the ‘Holy Grail’ of marketing: creating ‘fans’—people who think of a brand first and represent a much higher lifetime value. But today’s technology combines social, mobile and analytics to create new ways to drive another layer atop the four pillars, including higher trust, greater insight and relevance, and recognition leading to virtuous cycles of increasing value.

These are lofty goals that would be impossible without the new approach in technology and strategy offered by Customer Loyalty Management.

Aligning the Tools and Techniques

As consumers’ buying patterns change, the tools and techniques of loyalty need to change alongside them. There are four specific areas where the tools and techniques align with the four pillars and matter the most for the new Customer Loyalty Management:

  • Social
  • Mobile
  • In-store
  • On-line

Each of these areas is impacted by those changing buying patterns, and there’s an opportunity for brands to avoid disruption and benefit from the shift. These points of personal and digital engagement are the new realities of letting consumers engage in ways that increase their experience and create true fans.

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