Customer Loyalty is not dead - Top 4 reasons why
Written by Pete Howroyd
I was recently asked to give my view on the current hot topic of whether Loyalty is dead. Customer loyalty is how I put food on my table and pay my rent so I sincerely hope it isn’t!
The other day over a coffee a contact of mine, who happens to work for a loyalty tech solution, appeared genuinely concerned that news of loyalty and loyalty points being irrelevant and effectively dead would leave him without a job and career he is passionate about.
Given the nature of our business at The Loyalty People we speak with many organisations wanting to start loyalty and reward programs, and optimising and increasing the potential of existing programs. I can guarantee you that loyalty is most certainly not dead in any shape or form. My view is simple. Businesses don’t know how to use loyalty and associated technology to their maximal gain.
Top 4 reasons Loyalty is not dead
This conversation inspired me to write this article in the hope that some of our readers can settle their nerves around loyalty whilst giving some practical tips on how to avoid the ‘dead’ trap. There are many things that may make loyalty appear to be dead when in fact it is not. Here goes with my top 4 tips:
1. Lack of Vision
My favourite key question to ask clients is ‘what is your objective & what is your vision for loyalty?’ You would be surprised how many blank expressions you get even in the most senior of meetings. Your Loyalty, Rewards or CRM program must have a vision! If you don’t, then how do you know what you are trying to achieve? This not only helps your teams to understand the value of your program and to encourage people to work together towards a common goal, it also helps your customer base see where your program is going, why it’s there and what they can expect. In my experience an organisation without a vision cannot move forward, ideas get stale and customers get bored.
2. Talent (and a bit more vision)
This is a key point and one which can be difficult to talk through. Talent goes hand in hand with your vision. Putting it simply, if the leaders of your business leave they take their vision with them and then you have a problem. New leaders come in, with different ideas and viewpoints, make changes accordingly and you are back at square one.. It’s not enough for your vision to be the responsibility of one person whether that’s the marketing director, loyalty director, CMO or the CEO. You must share your vision and have teams living and breathing it to protect your program. We are talking about a program which touches the majority of your customers after all, wouldn’t you want everyone to know which direction its going in?
We’ve worked with businesses where there has been high turnover for loyalty and CRM heads and the teams are left confused with no real plan or direction as each leader had a different idea. If your teams feel like this then I can guarantee your customers will feel it too.
Another issue that can crop up across many organisations is the quality of talent recruited into loyalty and marketing roles. I am not sure why but there’s a trend which sees loyalty as a lower priority to other roles in an organisation. How can this be? How could you not invest into someone who is effectively the custodian of your customers, has direct access to their data and can influence behaviour at the click of a button? This baffles me. Time after time you see businesses choosing low grade managers to look after loyalty. Put your hand in your pocket and pay for someone who can write a vision and make it happen!
3. Lack of knowledge
This I believe is one of the biggest factors affecting the notion that loyalty is dead. It’s very easy to say that your program is under performing because you didn’t hit your KPI’s or that acquisition is lower versus last year or that you have awarded less points. None of this means loyalty is dead. This means that the business does not have the correct level of skill or resources to manage the program efficiently.
Many years ago I worked for a famous retail brand and one of the first things I was told when I arrived was that the loyalty program would be switched off because it didn’t work and was costing the business money. The first thing I thought of, other than what is the point of recruiting me if you switching off loyalty!? Was that this cannot be true and I advised the board of this organisation that within a few months we would have a health check completed to show what the potential of this program was. It turned out that not only did the business not communicate about the program online, In-store or by any other medium, but they also had zero skills internally to analyse what was happening in the base. A few months and new analytics team later we showed the business that by switching off this program would lose them over £50 million in sales! But what was most appealing to them was that if we optimised the program we could stretch customers spend by up to 60%. This company thought loyalty was dead. It wasn’t and it’s now enjoying the benefits of having a robust strategy and plan.
This one is really simple. If you do something over and over and over again with no change it’s most likely going to become boring, that’s unless you are Jeff Bezos checking your account balance. I think the industry is jumping on the ‘loyalty is dead’ bandwagon due to the lack of innovation. We all know that shopping behaviour has changed and that experiences are becoming increasingly important so why keep your program the same? Update it, make it cool, add new rewards, gamification, new communications and remind customers why they are part of the program. There’s so much inspiration across the world that a simple search online can give you a raft of ideas. Don’t let your customers get bored!
So, there we are! 4 points to think about when looking at the future of your loyalty program. I could spend hours getting into the detail and I welcome any discussion on ideas that could be added to the list along with your own experiences which may or may not support the notion that loyalty is dead.
I am yet to talk to a customer who has told me they don’t want their loyalty points or rewards so until then, loyalty is very much alive!