There has been explosive growth in loyalty programs in recent years. The 2009 Colloquy “Loyalty Marketing Census” reported that from 2006 to 2008, US loyalty program membership grew from about 1.3 billion to 1.8 billion, which is a compound annual growth rate of almost 18%. This equals approximately 14.1 loyalty program memberships per household. But are they all effective? How can loyalty programs be best used to engage and retain customers? Where does e-mail fit into a loyalty program?
There’s a big difference between the number of loyalty program members and those who are actually engaged with the brand. When you look at the active members, membership drops to only 6.3 loyalty programs per household.
So what accounts for this drop? The impact of loyalty program proliferation is that consumers will join a program for a one-time interaction if they receive an immediate benefit. All too often, saving 20% on your first purchase means saving 20% on your only purchase. What marketers are fast discovering is that traditional loyalty program membership does not mean actual loyalty. There are simply too many choices.
A loyal consumer is an engaged consumer – someone who goes out of his way to find your brand, use it and advocate for it. Traditional point-based loyalty programs aren’t necessarily the best tool to make that happen.
Instead of miles or membership points, a customer dialog membership program leveraging cross-channel communications is what customer-centric organizations need to foster true loyalty. E-mail plays a key part.
Customers don’t “opt in.” The company decides who they want to focus on, when they want to focus, and how they want to focus by analyzing customer history and preferences. It’s invisible to the customers that they’ve been targeted as part of a loyalty initiative. From the customers’ perspective, they are receiving offers and rewards that are timely, relevant and welcome from a trusted organization.
Getting started is simple. There’s a wealth of customer information residing in your current data stores. Start by presenting an e-mail offer based on past interaction, behavior or preferences.
Because you can get real-time feedback on an e-mail campaign — and you can adjust messages and offers relatively quickly — it is a critical channel for your loyalty program. You can repeatedly test offers and slowly grow the program as you determine the recipe for success.
Key ingredients include targeting the right customers and establishing a preference center so they share their interests and specify how they prefer to receive information. Be sure the program tracks the device that your customers read your e-mails on so you can tailor the content and assure proper rendering. Track click-through so you know the topics of greatest interest.
A successful loyalty program is built on establishing an engaging dialogue with each customer. The key to establishing and building greater loyalty needs to be a part of every interaction you have with your customers. Start small and experiment, then slowly evolve as you find out what works for your brand and your customers.
Dan Smith is SVP of marketing at ClickSquared, a marketing services provider.