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September 2012

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By Sallie Burnett

If you're not regularly reviewing and refining your customer loyalty program then you may be long overdue for a refresh. Boosting member engagement, improving resource reallocation, evaluating and prioritizing the value proposition enhancements that deepen engagement with your members… these are just some of the ways you can optimize the ROI for your loyalty strategy. A loyalty program is not something that you do once, flip a switch and set it on autopilot.
Leading companies like Panera Bread, Safeway, Qdoba, Hertz, Starbucks, Toys “R” Us, Caesars Entertainment and many others, have audited their loyalty program's performance and updated their programs in 2012.

Ensure that your program continues to grow and be successful over the long-term with these important steps.

1. Put Your Customer Data to Work
As Bill Gates said in Business @ The Speed of Thought, “The best way to put distance between you and the crowd is to do an outstanding job with information. How you gather, manage and use information will determine whether you win or lose.” Successful loyalty programs gather customer data and use it to:
  • Attract profitable customers.
  • Determine allocation of resources to improve ROI.
  • Evaluate customer reaction to specific promotions.
  • Deflect competitive challenges.
  • Identify trends and opportunities.
  • Increase customer conversion rates.
2. Create a Shared Vision
In a true customer-centric organization, the vision has to be clear and - equally important - embraced at all levels by all employees. Make sure everyone knows how the program works and why it's good for the customer and the company.

3. Set Realistic Goals
Sometimes loyalty programs are developed with good intentions, but unclear objectives. If that's the case, step back and develop program objectives based on your primary business objectives. Do you want to… differentiate yourself from the competition? Engage your customers and collect information on their needs, future intentions and preferences? Build strong relationships with high value and high growth customer segments? You decide - but you have to decide.

4. Know Your Customers
All customers are not created equal. Define your best customers. Avoid rewarding “free riders” - loyalty members who join your program but give you nothing in return, and instead focus your efforts on truly profitable, loyal customers.

5. Make Rewards Attainable and Realistic
The 2012 Click Fox Brand Loyalty Survey shows that “fifty-four percent of respondents would consider increasing the amount of business they do with a company for a loyalty reward, and 46 percent said they already have. However, the majority of consumers (62 percent) don't believe that the brands they're most loyal to are doing enough to reward them”. Your loyalty program should be a balancing act between low-cost, easily attainable short-term rewards that are redeemed early in the program, and more highly valued, aspirational (and more costly) rewards that can be redeemed once customers spend more. While the short-term rewards encourage enrollment and ongoing participation, the long-term rewards serve as an incentive for your customers to consolidate purchases and award you greater share of wallet.

6. Avoid Loyalty Turnoffs
Don't bombard customers with messages. Develop a multi-channel communications plan that includes in-person, social media, mobile, website, email and direct mail. Make sure your messages are relevant to the season and customer purchase cycle and have a synergistic message across channels.

7. Measure Success
Go back to your objectives. What do you want to achieve? Track and measure your loyalty program's performance based on short-term campaign results and long-term overall changes in customer behavior, like spending more per transaction, shopping more frequently, spending more each year.

No matter how the economy is doing, the quest for loyalty offers bottom-line rewards for those who prevail. The pursuit for customer insight shouldn't be taken lightly or without long-term dedication. So dig in, and discover it's well worth the effort to build those customer relationships.

Sallie Burnett is the president of Customer Insight Group, Inc., a strategic marketing company that helps companies improve the return on their marketing investment by developing and executing high-performing acquisition, loyalty, upgrade and retention programs. Explore how Customer Insight Group can help you refresh your loyalty program to increase sales and build profitable customer relationships by visiting or call 303-422-9758 today.

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