Four Loyalty Trends to Watch in 2014

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Four Loyalty Trends to Watch in 2014
Four Loyalty Trends to Watch in 2014

The images of snowy fir trees, extended family gatherings, and lots of beautifully wrapped gifts are synonymous with the annual holiday season—a time when consumers are primed to buy on the promise of Thanksgiving, Black Friday, Cyber Monday, and post-Christmas Day discounts. It's also the time of year when marketers and retailers are heavily focused on driving all-important revenues. They have to be.

With so much attention on the final quarter's performance, it can be easy to neglect—or at least put aside—what's important for customer engagement beyond the holiday season. It has to be more than discounts.

How will brands and loyalty marketers interact with shoppers in the New Year? Will they engage customers and loyalty program members in smarter—not necessarily more frequent—ways? And what trends will impact their customer engagement strategies and loyalty programs in 2014?

These are some of the questions framing my forward outlook on loyalty. While it's too early to predict results, I believe the following will impact how marketers and brands address customer engagement and loyalty program success in the coming year.

1. Personalization: Loyalty programs have been doing an OK job with personalization. Ironically, the challenge has been too much personalization, not too little. Becoming more personal can be tedious and cumbersome and it's easy to get things wrong.

In 2014, marketers should aim to combine data-based customer insights with predictive behavioral models, indicating what rewards (tangible or status based) or channels a customer prefers. I advise brands to analyze customer data to better align what matters to customers with what impacts the business, and to personalize messaging just at the touchpoints or channels where the two intersect.

We'll also see more brands realizing that personalization won't have to be as broad-reaching as originally thought. For instance, if a customer's favorite point of brand interaction is the smartphone, it wouldn't make sense to personalize direct mail. Trying to get too personalized at too many touchpoints can easily backfire, no matter where the engagement unfolds. That's because behavior predictions, no matter how well-informed, can be incorrect—and overreliance on them means more chances to get it wrong.

2. Customer behavioral analysis: This relates to personalization. More brands are analyzing customers' behavior to discover what matters most to them and how that value impacts the business. But that's not enough. Brands must also establish what the goal is for a particular campaign. Always know at the outset whether you want customers to spend more now, stay with your brand longer, or bring friends over. All of these efforts will help drive ROI—but some brands miss the mark by not having a clear idea of the strategic implications of each campaign.

Marketers should keep in mind that loyalty is not just a promotion nor does it always deliver an immediate, measurable ROI boost. It is a journey rather than a destination; it happens over time and over a series of promotions and interactions. Take a close look at the full length of individual customer relationships to know how and where to measure engagement for an accurate picture of those relationships' evolution.

3. Mobile integration: Mobile integration might, ironically, be going backwards too. The rate at which consumers can meaningfully integrate technological advances into their lives can't keep pace with the rate of innovation and new ideas. Companies aren't immune either. They're pressured to pay attention to everything that is released and compelled to always remain ahead of the curve. Brands must combat this technology and data overload, understanding what really matters to their customers before they modify their strategic direction.

History affirms this. At first, Internet page views were the rage, but over time they proved less important than knowing what consumers did after they clicked. Facebook likes work the same way. Not every new potential avenue of technological engagement, particularly in the mobile space, will necessarily benefit the brand. Facebook might be an ideal channel for engaging twenty- and thirty-somethings, but it's less applicable to sixty-somethings. My advice: Look at your customer data and see which engagement channels are most popular among the audience you're targeting. Then only use, perhaps, the top two or three.

4. Integrated multi-tender loyalty: The payment space—particularly the mobile payment space—is full of exciting loyalty possibilities. There are many players backing new solutions and the two worlds of payments and customer rewards programs are increasingly blending together. Too often, however, loyalty program offerings aren't in sync with those of cobranded cards and seamlessness breaks down—both in rewards and across the whole loyalty experience. Therefore, if you're a part of a brand coalition that allows customers to accumulate and redeem rewards across several currencies, remember to ensure that payment methods are seamlessly integrated. Just as multichannel engagement has evolved to omnichannel, which makes for a consistent experience across platforms, multi-tender loyalty is full of the same untapped potential.

Forward thinking about loyalty: Measuring success

Regardless of which channels and technology brands and their customers prefer, loyalty program success in 2014 will hinge on knowing your customers by analyzing your data. This doesn't mean being 100% reactive to customer needs, but it does mean knowing which types of promotions work—and which don't—for particular audience segments. It means knowing whether financial or emotional incentives are more likely to elicit a segment's loyalty and promoting the right kinds of behaviors. It also means:

  • Recognizing the need to identify—and use—the right channels and data to really fine tune messaging and offers with the right calls-to-action.
  • Learning to be selective about which technological advances are the right ones to tap for optimal engagement and ROI from each segment.
  • Knowing whether or not points or other types of triggers will add value to the customer experience or if it will detract from it overall.

Loyalty marketers have the ability to provide better service and better communication to their customers than ever before. Being smart about how to measure ROI versus taking a cookie cutter approach when it comes to loyalty is really what will help impact the success of that measurement and their programs in the year ahead.




Michael Hemsey is president of Kobie Marketing.

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