Over the years working with Loyalty programs with so many companies in the Retail sector, I feel I can summarize some observations:
- True customer loyalty is created when the customer becomes an advocate for the organization
- Rewards alone don’t generate loyalty. If a loyalty marketing program is just about earning points you end up buying loyalty not earning it. The loyalty is to the program not the product or the company.
- Rewards-only programs can be easily replicated by the competition, will quickly be commoditized and become a defensive play that no competitor can afford to unwind.
- Loyalty can be attained, but the organization has to work at it, continuously, and it will not possible with all customers.
- These is NO One-Size Fits-All Loyalty Program
- A win-win relationship must be established, and this cannot be accomplished if both parties cannot realize benefit. The two poles must be attracted to each other.
1. Compelling Value Proposition
- That which provides the customer with a tangible benefit if he or she decides to join a benefit program.
- Leading organizations adapt the value proposition for different segments of clients.
- Customer satisfaction is the degree to which customer feel their needs are met.
- Short-term perspective, very much based on the transaction with the customer.
- It is a feeling of connection to, and belief in and enterprise and its proposition, created by a “feel good” factor from interaction that lead to continued relationships.
- Loyalty is ultimately the crucial measure and it is more difficult to achieve than satisfaction.
- A customer can be dissatisfied despite being loyal.
- Loyalty can only be created on the basis of trust and repetitive positive experiences over time.
- The pinnacle of customer loyalty is where the customer acts as an advocate for the enterprise.
In the last years, many banks talked a lot about the importance of customer knowledge but only few of them have put successful actions behind their words. Companies still struggle with the basics of revenue growth areas:
- Customer Segmentation: Who are my customers, and how do they differ?
- Differentiated Treatment: How should I treat each customer segment?
- Optimization: How can I optimize treatment decisions to maximize value at an individual level?
The ability to classify or cluster customers / prospects based on certain business rules or inherent customer data behavior, pattern using advanced statistical modeling tools and techniques. To effectively use the gold mine of customer information, banks must develop at the same time the capabilities to aggregate, analyze, and use the customer data. And the best way to develop these capabilities is to create a specific unit at Headquarter level / enterprise level. Let’s call this unit “Marketing Factory”.
- The first is create an integrated view of each customer: marketing analytics achieves this goal developing superior data management capabilities
- The second goal is understand and predict customer behaviours: marketing analytics achieves this goal
- Developing propensity score
- Realizing segmentation and profiling analysis
- Realizing analysis of customer profitability and long term potential value
- Developing analysis on customer satisfaction and loyalty
- Develop marketing and sales dashboard
- The third goal is to provide insights that directly improve sales effectiveness. Marketing analytics achieve this goals:
- Identifying relevant commercial events and related offer
- Defining next product to offer for each customer
- Identifying the most profitable combination of customer segment/channel/product thanks to optimization tools