Putting the “Loyalty” Back into Loyalty Programs

Four ways to break through a saturated market

One of the biggest customer service successes has been the loyalty program – designed to reward customers for opening their wallets. The more they spent, the more incentives they'd receive. And the rewards kept coming: cashing in on coupons, discounts, and rewards as retailers, banks, and other service organizations made billions off them, supplementing regular revenue streams.
 
But those golden days seem like a memory of the past. Most consumers are enrolled in an average of more than 10 loyalty programs, meaning they're being bombarded in all directions, without much bandwidth to act. Too many coupons are expiring, with rewards being left unclaimed, in most cases long before customers even notice they were entitled to them. But the see-saw has now shifted: Retailers are no longer making money off of loyalty programs. In fact, they are losing – a lot.
 
Breaking through the noise: living and breathing customer preferences
Standing out in this saturated market goes back to fundamental marketing: Understanding how, where, and when customers prefer to receive your information – and delivering it based on that demand. If you fail to do that, you can forget about them buying, or even reading your information before sending it to the trash.
 
Yet, it's a lot easier said than done, especially since every customer has his or her own behavior. And customers are accessing more channels than ever before, whether it's Facebook, email, text messaging, interactive chat, Twitter, or online discussion forums. Traditional loyalty fliers and coupon books find their way to the bottom of the mail stack or are viewed as spam.

So how can retailers and marketers find that proverbial needle in the haystack and align loyalty communications with exactly what each customer wants? Here are four proven starting points:

1. Ask, then ask again: You'll never know how customers prefer to receive information without asking. When a customer becomes eligible, or opts in, for a loyalty program, this is prime time to capture customer preferences. After all, it's the only time they're really listening. Present all program options clearly and thoroughly, covering the many different communications offered to them – across the entire lifecycle. This provides valuable feedback to ensure loyalty programs are garnering attention and the cash registers are flowing.
 
While most businesses lack the manpower and time to reach out to every customer, automating this process through outbound telephones calls, with interactive menu options, covers a wider scope, and yields a more accurate gauge. And once isn't enough: As customer preferences shift overnight, you need to keep asking -- and do this more than once a year.
 
2. Never assume: While a customer's word is critical, it doesn't end there. Sometimes actions speak louder than words. For instance, one person might tell you they prefer text messaging for everything, but time and their actions may prove that they actually prefer to receive expiration reminders via text and account balances via email. It's best to continually tune in to customer behavior and trends, and take action if it's not lining up with their stated preferences.
 
3. Rely more on today's emerging communication channels: Consumers want to feel special and valued, with more individualized treatment. They want content that's relevant, timely, and personal.  And if they expect information via email or text, yet get it through regular mail, that certainly won't strengthen your relationship. It's even more critical to expand touchpoints, offering communication through several means, such as email, text, and social media. Studies show that multichannel strategies result in a threefold increase in redemptions, versus relying on just one channel. That equates to millions of dollars right there.
 
4. Embrace the mobile revolution: The number of cell phones is expected to surpass the total number of Americans by the end of 2012. Text and mobile communications is morphing into the preferred communication of choice.  According to a 2010 survey from Harris Interactive and SoundBite Communications, 43 percent of consumers would act on loyalty program benefits if coupons and promotional codes were delivered to their mobile device. You should adapt to this trend and create active dialogues with customers through text messaging, whether by soliciting communication preferences or delivering welcome messages and account notifications.
 
Taking these steps will help you take back control of your loyalty programs, and drown out the competition, by ensuring your customer champions are always cashing in.
 
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