12. JUST TO RECAP
True value for the customer
Strong use of digital media
Segmented and customized programs
There’s no template.
13. QUESTIONS?
ASK AWAY.
KNOWLEDGE IS OF NO VALUE UNLESS
YOU PUT IT INTO PRACTICE
-ANTON CHECKOV
Editor's Notes
Amanda introduction
margaretChanges in economy: Economy is faltering and signs of recovery are minimal. In order to deal with the shrunken economy, consumers are having to tighten their belts and restrict their spending habits. Most people are looking for ways to stretch their dollar further, and businesses are aware of this. Consumers have changed:It’s not just their spending habits but the value systems are different, as well. They’re more digital savvy, their values have changed, and so has their outlook on the world. Their future is not as bright as generations before them, so their relationships with brands have changed. What businesses are doing: In order to hold on to their customer base, businesses are finding ways to incentivize purchasing and attract high value, loyal customersBain & Co reports that it costs 6-7 times as much to acquire new customers than it does to keep existing ones, so businesses are highly motivated to reward the customers that have already used their products and have developed strategies to encourage an ongoing relationship. One of these methods is the consumer loyalty program.
debbieAmerican Airlines developed the first modern day loyalty program in 1981. Essentially, what they did was develop the frequent flyer miles that we have all come to know and rewarded passengers who traveled frequently with them and created different tiers of loyalty for their most valued customers. The people at the TOP of the tiered program have access to airport lounges, preferred seating, and of course miles for free trips. Loyalty programs are also extremely popular among the hospitality industry. For example, the Hilton Hhonors program offers deals to members for hotel stays, spas, car rentals, outings and experiences and other entertainment consumers can enjoy while staying at the Hilton. Retail marketers realized the value of developing consumer loyalty programs as a way to aggregate and collect consumer information like email addresses, birthdays and favorite products. Just to show how popular loyalty programs have become, there are more than 2Billion loyalty memberships in the US- which is more than 18 memberships per household. The interesting part is that roughly half of those are active memberships (8.4 per households) which presents a huge mis-opportunity for many loyalty programs.
Margaret Customers want real value, not just frills and thrills.We already know that today’s audience is different. Consumers have shifted, to some extent, away from a desire for possessions towards a desire for experiences. -- For example, Tasti-D-Lite, a big frozen yogurt chain based out of NY, launched the “start a Tasti-Habit” campaign after observing the consumer trend of striving for a healthier lifestyle. They cultivated customer relationships by becoming an advocate for their healthy life goals and including Tasti-D-Lite in their diets in lieu of more fatting fare. Spearheading this effort was the TastiRewards loyalty program which was connected to social networks like Foursquare and Twitter.It’s not just about money and incentivizations. It’s about relationships, standing for something, finding ways for companies and brands to add value to consumers’ lives.
debbieConsumers fully embrace digital media. So should you. As marketers, we have to pay attention to consumer behavior, which is why intelligent media planning is so important. Understanding where your consumers are “living” and spending their time will help direct how and where you want to communicate with your consumer. Even though media may not be a typical consideration in a loyalty program, targeting is almost just as important as what’s being offered in the program. If you’re not targeting or reaching the right people and engaging with them on their turf, dollars and time will be wasted. Relationships don’t happen out of the blue, you have to be in the consumers’ consideration set and interact with them in a meaningful and familiar way. --AmEx + Foursquare AmEx is already well known for their rewards program but by partnering with Foursquare they allowed their consumers to get instant credit rewards upon check-in. Their accounts were linked, simplifying redemption for users by streamlining the process. It couldn’t be easier. Check in on 4sq and if your AmEx is linekd to your account, you get an automatic discount upon purchasing and it just shows up on your bill, no swiping, no coupons, no rewards cards. If the reward exisits, you automatically get it. No effort needed. This is a perfect example of integrating consumer loyalty with media consumers are already using. AmExknew their consumers were already using 4sq, so they just increased the benefits for both themselves and their clients by using the popular software. Another added benefit is the consumer information a company can gain from digital loyalty plans.
amandaCustomers expect customized experiences. Consumer loyalty programs allow marketers to gain so much information from their customer base, we foresee loyalty programs becoming more customized and segmented. In the digital world specifically, there’s no reason why Margaret couldn’t have a loyalty program with AmEx that’s different from the rewards allotted to Debbie, with her AmEx membership. The amount of information available on social media sites such as stage of life, transitions, interests and lifestyle in general, you can create programs that are completely customized to individual or similar groups on consumers and are therefore highly valuable to those segments. Say you’re Central Market—you create membership system and you are able to track member’s frequent purchases. You notice that one customers buys a lot of Gluten free products—you can take this insight and customize their rewards to fit a gluten free lifestyle, adding a lot of value to that consumer’s relationship with your store. A company that’s done something similar to this was the UK based grocery chain Tesco. They used membership data to segment their customers and then matched characteristics and frequent purchases with relevant coupons and offers.
Amanda It impossible to predict exactly how loyalty programs will evolve. However, based on our research we predict that we’ll see more and more loyalty programs with these insights built into their core: *True value for the customer -Getting consumers to enroll in loyalty programs is easy. Getting them to actually participate on an ongoing basis is much more difficult. The loyalty programs that succeed are the ones that provide true value through discounts and incentives that are relevant to the customer and offer tangible benefits. * A digital foundation robust data flow management * Segmented and customized programs -Providing true value relies heavily on collecting customer data and integrating it in a way that allows the program to deliver customized benefits.Loyalty programs are meant to be mutually beneficial. If it’s not benefitting your company, there’s no point in doing it. If it’s not working for your consumer, the same is true. Successful programs must constantly evolve to meet the changing needs of their customers. There’s no template for a successful program. Customization and information mining are key to developing a program that works for the specific brand and a specific audience.
