How to Create and Maintain a Successful Loyalty Program Part A
How to Create andMaintain a Successful Loyalty Program
Our Goals for this Session• Define Loyalty and it’s impact on marketing• Give you the 7 keys to successful Loyalty Programs• Demonstrate the power of Customer Loyalty for Life Line Screening
Introductions• Alan Rosenspan, President of Alan Rosenspan & Associates. Has created and worked on loyalty programs for clients such as AT&T, HSBC, and has over 25 years experience in direct marketing.• Trish Mathe is a nationally recognized and award winning database marketing executive with over 15 years ofexperience both in financial and healthcare services. She is Vice President, Database Marketing for Life Line Screening.
What is “Loyalty?”• Not a dog-like devotion to your company and your products• Not a one-time event. An ongoing relationship that must be continually renewed and refreshed• Is it attitude or action on the part of the customer?• The same is true of the marketer
“Loyalty Marketing is a mindset– involving reallocatingmarketing budget fromacquisition to cross-sell, share ofwallet capture and retention”
Does Loyalty Matter?• It helps you build a stable base of reliable revenue and continued interest in your brand• It can lead to brand innovation and new product development• It can be an effective tool to gain new customers, through referral and word-of-mouth• It can have a huge impact on profits (not just sales)
• “As a customer’s relationship with the company lengthens, profits rise. And not just by a little. Companies can boost profits by almost 100 percent by retaining just 5 percent more of their customers” - F.P. ReichheldThe Loyalty Effect
Loyalty Becomes Mobility• Loyalty used to be seen as a good thing• Now it is often seen as “stupid” or “lazy”• People used to stick with one provider or one product• They usually had fewer choices• How many kinds of shampoo can you buy?
Take Financial Services….• You used to have one bank...• If you had three or more relationships with that bank, you were probably a customer for life (unless you moved or changed jobs)• The bank’s goal was to increase the number of relationships• How many banks do you currently work with - for your checking, electronic bill payment, credit cards, etc.• Plus now many companies offer credit or other banking services
Tangible, tactile membership Most Loyalty programs have something the consumer can keep in their wallet or on their key chain It becomes a physical reminder of their membership - even if they don’t have to use it that often Can we be more innovative?
Newsletters• Helps generate loyalty among customers; especially B2B customers• Can lead to pass-along’s and referrals• Must be “customer-centric”• Customer stories, helpful tips, user-driven content essential• Involvement devices very important
Customer Surveys• One of the best ways to generate loyalty among customers• Shows you care• Identifies potential problems or issues that could disrupt loyalty• Helps you understand loyalty drivers (discounts, service, etc) that are most relevant to your market• Survey customers at least once a year• ....and act on what you learn
Added Recognition• Use valued customer language• Remember their likes and dislikes and respect them• If possible, give them advance notice – “We wanted you to be the first to know…”• Treat them like the airlines do – separate lines for checking in and boarding
Added Service• Capital One - “Talk to a real person”• Dedicated customer service representatives• Moneyback guarantee extended to best customers• Better customer problem/resolution• Neiman Marcus advance sale - best customers get in first!
www.thedoghouse.co.uk• Gift buying service• What do you want us to remind you about?• When would you like us to remind you?• How about an automatic purchase?
Loyalty Programs• They started with Frequent Flyer Miles in 1981• American Airlines noticed that 3% of it’s passengers represented over 65% of it’s business• Virtually every category of company has one• Your competitors probably have one too• But your customers are already loyal, aren’t they?
…or are they?• The Ogilvy Loyalty Centre in the U.K. identified what they call the Customer Satisfaction Trap.• They report: In the automotive business, on average 85% of all people report being satisfied with the cars they’ve purchased - but only 40% buy from the same dealer again.• In business to business, 65-85% of defectors report that they were either satisfied or even very satisfied with their former supplier. Note: their former supplier.
• “Customers contribute greater share and purchase more frequently from Brands with whom they have a relationship and they continue to purchase from these Brands over longer periods of time. Research has shown that attrition isn’t a result of brand dissatisfaction, but often because a meaningful relationship has never been established with the customer.”
1. Value• The customer must perceive value or the loyalty program won’t work. Value doesn’t have to mean only premiums or prizes.• The Emerald Aisle campaign for National Car Rental is a frequent- renters program, with rewards and prizes.• The reasons that I belong are: I don’t have to wait on line to get my car, and at certain locations, I can rent a Porsche, a Rolls- Royce, a Ferrari and other cars I can’t afford to own.
2. Choice• This involves the customer. American Express led the way by changing it’s Membership Miles program to the even more successful Membership Rewards.• Many travel programs offer you the opportunity to use your points for magazine subscriptions, hotel offers or gift certificates.• Credit cards give you a choice of money-back, travel rewards or merchandise• Few successful loyalty programs are one-dimensional
3. Aspirational Value• Rewards can’t simply be cash back or discounts• That’s too much like always having a “Going Out of Business” Sale• You need to build in some extra emotional value - for example, not just frequent flyer miles but miles towards a well- deserved vacation
4. Relevance Use appropriate channels to gather customer profile data, including registration pages and surveys Make each customer’s experience (with product and in communications) unique based on their needs. Deliver message to customer at times when they will be the most receptive Develop customer lifecycles as customers have different needs at various stages of the brand relationship