Forrester’s recent survey of loyalty marketers found that most are still fine-tuning their programs to establish and solidify relationships with consumers, as well as to build an emotional connection with their most frequent shoppers. Today’s consumers demand more context and relevance than ever before, so how do you get the value proposition right?
Forrester recently wrapped up a survey of loyalty marketers that revealed most are still working toward leveraging their strategies and programs to establish and reinforce relationships with the consumer across the entire life cycle.
According to the survey, the top three business objectives for customer loyalty programs are engaging customers, retaining existing ones and acquiring new ones. As we’ve tracked the evolution of their strategies over the past few years, we see that marketers increasingly recognize the importance of loyalty as an overall strategy, rather than just a marketing tactic or program. Case in point? Two years running, the No. 1 area for planned increases in spending is improved member and customer experience. This dovetails well with Forrester’s consumer research, which shows that the quality of customer experience is a key driver of retention, enrichment and advocacy metrics.
Marketers have no problems recognizing the challenges they face with their loyalty initiatives — especially around data management and insight applications. Over half of respondents indicated personalizing offers, content and experiences based on behavior is a key roadblock to success, with about a third calling out managing data from multiple sources and understanding customer interactions across channels. With today’s empowered consumers moving seamlessly across devices and interacting with brands across multiple touch points, this is not surprising.
Moving forward, marketers need to break the habit of over-relying on building behavioral loyalty through transactional tactics. Here are a few thoughts on how they can get started.
- Use the data they collect. The discrepancies between data collected and data used show that marketers are using loyalty programs to better understand their consumers, but struggle to apply those insights in meaningful ways. Seventy-four percent of respondents in our survey said that they collect customer preference data, while only 45 percent use it to personalize loyalty offers, communications or other interactions. Sixty-six percent collect voice-of-the customer data, but a meager 10 percent are acting on this feedback data. This is a huge missed opportunity. By closing the gap, marketers can tailor their loyalty initiatives to their customers’ needs and better meet their expectations through rewards and recognition.
- Reassess the benefits mix and refresh their program value proposition. Marketers must understand and communicate the unique value that their specific program can offer their best and most loyal customers. Consumers tell us that they seek out the loyalty programs of brands they like and have elevated expectations of what those brands and programs should deliver. To meet those expectations, marketers must design a program structure and benefits mix that match customer expectations and foster a more emotional connection. They need to feel valued and appreciated, not just rewarded.
- Build and measure emotional loyalty. The loyalty equation is incomplete without both behavioral and emotional loyalty. Forrester’s research shows that emotion is one of the strongest unique drivers of loyalty, and companies should strive for customers that want to stick with them, not just feel stuck. This means investing in measurement frameworks that help better understand what actions and emotions they must elicit across interaction points to engender true loyalty. It also requires broadening the focus of loyalty marketing tactics beyond the purchase.
To handle their challenges and move toward the aspirational state of evolving programmatic strategies, we see marketers returning to the basic building blocks: investing in baseline technologies and pushing for strategic insights capabilities from their partners. Fifty-seven percent of respondents indicated that technology features and functionality were the most important factors when considering different end-to-end loyalty solutions.
Marketers’ top ask from their loyalty solutions providers is innovation that can take their strategies to the next level. This makes perfect sense given that today’s consumers expect a lot, including experiential rewards, special treatment, better customer service and other softer benefits, not to mention the instant rewards they know can be earned from the many other loyalty programs they belong to. Marketers who want to evolve their strategies but are struggling with basic blocking and tackling can push forward by investing in insight capabilities and expanding their programmatic value propositions first.
Today’s consumers demand more context and relevance in how companies engage with them than ever before, and loyalty programs provide an insight-filled view into customer behavior, motivations and preferences. If you get the value proposition right, it encourages customers to participate, share more information, and enhance customer understanding even further, all of which have far-reaching applications for program optimization, marketing and beyond.