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In our uncertain economic climate, loyalty programs play an increasingly important role for direct marketers. Customer loyalty programs have been around for nearly 30 years in most developed countries in the world, including the U.S. and most of Europe. As a result, it’s a saturated market.
COLLOQUY, which comprises a collection of resources devoted to the global loyalty-marketing industry, conducted research last year that showed the average U.S. household was a member of 12 loyalty programs. “That seems unlikely, but it’s because a lot of folks will sign up for the initial offer but then not re-engage with it again,” explains Rick Ferguson, COLLOQUY’s editorial director. He says that in terms of programs that customers actually pay attention to and participate with, that number falls to about four. “That presents a challenge for loyalty marketers. If you’re not one of those four, then you’ve got problems—you’ve got a lot of disengaged members.”
The trick, of course, is getting your program to stand out. “The way you do that is to understand your customers, your community better than your competitor does,” states Ferguson. Here’s how to do all of that better.
1. Take a Good Look at Your Customer
Any customer loyalty program provides a lot of information about the customer, and that’s the reason to run it in the first place. “You’re giving value to customers, and in exchange for that value, they’re allowing you to track their behaviors,” comments Ferguson.
Whether we’re talking about a retail loyalty program, a credit card with a reward program or a frequent flier program, the operators of these programs should pay attention to customer behavior: what’s bought, how much is bought, the channels via which the purchases are made, survey participation, requests for information and so on. “Most program operators are sitting on a mountain of information. But, for the most part, we haven’t done as good a job as we should using that information,” says Ferguson
2. Get Value Out of Your Data
“The idea is, if you can understand customers a little better, you can put them in buckets. Those buckets may be how valuable they are to you or how much potential value they have,” shares Ferguson. “Then you start to give them offers based on their past behavior.”
Ferguson provides the example of a grocer that’s operating a grocery loyalty program. After pulling out all the customers who bought diapers for the first time in the past 12 months, it could send them offers based around that lifestyle change, such as for formula or more diapers. “That’s what’s going to transform loyalty marketing over the next five years or so; you’re going to see retailers in particular get much, much more sophisticated in how they use the data that’s coming into a loyalty program,” shares Ferguson.
COLLOQUY, which comprises a collection of resources devoted to the global loyalty-marketing industry, conducted research last year that showed the average U.S. household was a member of 12 loyalty programs. “That seems unlikely, but it’s because a lot of folks will sign up for the initial offer but then not re-engage with it again,” explains Rick Ferguson, COLLOQUY’s editorial director. He says that in terms of programs that customers actually pay attention to and participate with, that number falls to about four. “That presents a challenge for loyalty marketers. If you’re not one of those four, then you’ve got problems—you’ve got a lot of disengaged members.”
The trick, of course, is getting your program to stand out. “The way you do that is to understand your customers, your community better than your competitor does,” states Ferguson. Here’s how to do all of that better.
1. Take a Good Look at Your Customer
Any customer loyalty program provides a lot of information about the customer, and that’s the reason to run it in the first place. “You’re giving value to customers, and in exchange for that value, they’re allowing you to track their behaviors,” comments Ferguson.
Whether we’re talking about a retail loyalty program, a credit card with a reward program or a frequent flier program, the operators of these programs should pay attention to customer behavior: what’s bought, how much is bought, the channels via which the purchases are made, survey participation, requests for information and so on. “Most program operators are sitting on a mountain of information. But, for the most part, we haven’t done as good a job as we should using that information,” says Ferguson
2. Get Value Out of Your Data
“The idea is, if you can understand customers a little better, you can put them in buckets. Those buckets may be how valuable they are to you or how much potential value they have,” shares Ferguson. “Then you start to give them offers based on their past behavior.”
Ferguson provides the example of a grocer that’s operating a grocery loyalty program. After pulling out all the customers who bought diapers for the first time in the past 12 months, it could send them offers based around that lifestyle change, such as for formula or more diapers. “That’s what’s going to transform loyalty marketing over the next five years or so; you’re going to see retailers in particular get much, much more sophisticated in how they use the data that’s coming into a loyalty program,” shares Ferguson.
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