Improving customer retention programs: Fewer than 33 percent of loyalty customers feel that their loyalty memberships are addressing their needs
Question: Why is a loyalty program an integral part of a business?
Answer: It comes down to pure economics. When a business wins customer loyalty, through superior service, through fair pricing, and through programs which reward loyalty behavior, market share and revenues increase. Additional revenue means incremental investment back into the business, which in turn increases the value to the loyal customer base.
Loyal customers appeal to the staff, boosting morale; higher moral shows in the form of better service, and the whole cycle feeds off itself. Meanwhile, competitors are left by the wayside, with the less desirable customers—those looking only for bargain, and the less motivated staff.
Q: What are the two most important things for a business to do when creating a loyalty program?
A: Make it relevant and make it mobile.
Consumers continually face new or “improved” customer loyalty programs, and with no cost, sign up for any and all. But typically after an initial offer, these customer loyalty programs are relegated to back of wallet, or left at home. Many shoppers have a whole stack of cards to their name—the average household has signed up for no less than 18 memberships. What’s worse, most of these programs, even when used, are not driving sales or boosting customer satisfaction. Fewer than 20 percent of loyalty members say their memberships are influential in purchasing decisions and only 33 percent of loyalty customers feel that those programs are addressing their needs. Relevance is a top critical success factor with loyalty programs and campaigns. Loyalty programs must be relevant to customer’s individual interests. Campaigns, messages, offers and incentives must be personalized, relevant and contextual in order to motivate loyalty members and achieve success with customer loyalty programs.
“Fewer than 20 percent of loyalty program members say their memberships are influential in purchasing decisions and only 33 percent of loyalty customers feel that those programs are addressing their needs.”
Real time messaging and geo-targeting are an incredibly important component of reward program these days because many consumers are always on thanks to their mobile devices.
Mobile devices have reshaped the way we access information, and capitalizing on the real-time and geo-targeting capabilities of mobile is an important way loyalty programs will be able to capture their users’ attention.
Q: What are the top three customer engagement trends for this year?
A: Relevant marketing, mobile delivery and geo-location technology. As customer loyalty programs become ubiquitous, it’s necessary for businesses to deliver a relevant loyalty program where and how their customers expect to receive the program. Recent surveys suggest that customers, especially among Gen Y consumers, are becoming increasingly dissatisfied by the lack of mobile services offered by their financial institution. This sentiment will lead to winners and losers. Those who innovate and fully utilize the information available to them will be the winners; those that don’t will be the losers.
A popular trend is to utilize information available about the customer’s spending habits to deliver customized, targeted and relevant marketing. This marketing can include things like loan specials from your financial institution or even card linked merchant offers. If the marketing is relevant, the customer will see more value in the offer and become more engaged. Broadly prescriptive marketing becomes spam to the customer and has the opposite effect. The key is how to deliver this relevant message to your customers.
“Mobile devices have reshaped the way we access information, and capitalizing on the real-time and geo-targeting capabilities of mobile is an important way loyalty programs will be able to capture their users’ attention.”
If the surveys are correct, customers are looking to have engagement capability on their mobile devices. Part of this engagement should include your loyalty program, but should also include customized marketing. Identifying where the customer is physically located will help provide relevant engagement where the customer is expecting it. Geo-location is nothing new, but requires mobile service to be effective. Enter Bluetooth Low Energy or BLE. This technology allows a compact beacon to identify the customer and allow for the delivery of customized prompts or messages to a smartphone or tablet.
Q: How do you maintain customer loyalty while still marketing yourself to new customers?
A: Though marketers consider customer acquisition to be the most important advertising goal, successful companies know that engaging their loyal customers is critical to their bottom line. Compared with loyal customers, new ones are more price-conscious. The chances of getting a sale from a new person is 5 to 20 percent. And actual sales from promotions sent to them is less than 1 percent. Compare that to loyal customers (those who have visited at least 10 times) who account for about 20 percent of your customer base, but drive 80 percent of your total revenue. So the real goal is to acquire new customers and quickly turn them into loyal customers.