By Jeanne Roué-Taylor
Just one day of shopping proved the high value of strong customer loyalty programs.
Spring has come and so has the time to spend my weekends replanting flowers, coaxing the grass back to its summer green, and making the garden a wonderful place of tranquility once again. Simply because I started with my repair work, I ended up at Orchard Supply Hardware, a TIBCO customer that manages customer loyalty through our Loyalty Lab Reward platform. I was asked to sign up and so I did—a painless process that gave me the opportunity to be rewarded for repeat business. In fact, a few minutes after my purchase, a five-dollar coupon arrived in my email, along with a note thanking me for my business, which enticed me to go back again.
Nothing That Fancy
For my second stop to buy plants, I went to a well-known garden center chain where I was also asked to sign up for something, but this time for a mailing list. I had to ask what that would give me in return for my personal information, and I was told, “You’ll get email notifications of our latest specials.” Being in the business, I asked if that would include personalized offers or advice on gardening based on my purchases, to which the polite young lady replied, “No. I’m sorry. Nothing that fancy.”
I felt let down. I’m no professional gardener and I would welcome opportunities to buy complementary products that would make my roses bloom brighter and my grass survive the summer heat. What the young clerk called “fancy” is exactly what I want from any company that I provide with my personal details and purchase history.
Two Very Different Shopping Experiences
My expectations are no different than any other consumer. Why should I give up personal information if the benefit is solely for the retailer and not shared? Why would a merchant hold my personal information and transactional history for use in a way that I see no benefit?
These two shopping experiences are at the center of what’s happening in the customer loyalty space. Mailing lists are from a bygone era. Loyalty has become a more complex affair as simple points based on transactions breed transactional customers. Today’s competitive customer loyalty platforms meet customer expectations in the middle, where personal information is provided willingly because the benefits are shared and everyone wins.
For brands that seize the moment, these are the best of times. For those who fail to modernize and meet today’s customer expectations, failure is only a matter of time.
To learn more, visit www.loyaltylab.com/expertise.
By Jeanne Roué-Taylor
The cost of acquiring a new customer is often estimated at five times the cost of retaining the customer you already have. And it isn’t just cost—customer loyalty has a big impact on a brand’s success. A study by Bain and Co. makes the claim that just a 5% increase in customer retention can increase a company’s profitability by 75%. The reason is simple: Due to the high cost of acquisition, a new customer is often unprofitable during the early years, and losing them during that stage is a net loss for the brand.
While the numbers are shockingly large, the real shock comes when you consider how much budget many marketers are willing to spend on acquisition and how out of date many customer loyalty programs are.
Gartner’s 80/20 Rule
What’s more, Gartner states that 80% of your future business will come from just 20% of your current customers. Capturing a customer’s loyalty very early in the relationship has a profound effect on revenue, profitability, and (for a marketer) job security.
While that’s a powerful message, that isn’t the end of the story. Repeat customers are far more likely to spend more (studies indicate 33% more) and have a much higher lifetime value for a brand. Keep in mind, too, that a retained customer is also likely to be an advocate and to help with acquiring other customers.
Ultimately, customer retention hits the three significant measurements of a business—cost, revenue, and profitability.
So Why the Disconnect?
It would appear that customer retention is essential, so why is it so often underserved? For one, programs that reward customer loyalty have been harder to measure than lead generation campaigns, and can be more complex to design, test, and execute. In the typical businesses driven by the urgent needs of the moment, a program that has payoff in months, while more important, can fall off the priority list.
With retention more profitable than acquisition, customer loyalty programs have more urgency than may be apparent at first glance. In fact, customer loyalty programs are critical to the future of the business.
Let’s face it: There needs to be an entirely new approach to customer loyalty programs if brands are to survive the digital and mobile revolution. While many brands realize the urgency of change, the challenges they face are daunting. For starters, a modern customer loyalty program is far more than the “points and plastic” of the past. Those programs were entirely transactional and bred transactional behavior in customers. A modern customer loyalty program consumes far more contextual data about a customer and allows a far richer conversation between the customer and the brand.
But if it was as easy as understanding that, most brands would be more than ready. The fact is, there are obstacles to overcome on the road to real-time customer engagement that may be bigger than marketers realize.
The Challenges in Implementing a Customer Loyalty Platform
The first real problem comes with the way retail brands have been organized. Loyalty programs cut across many organizational boundaries and affect not just marketing, but IT, finance, and sales. Each part of the organization has legitimate concerns about how a broad-reaching program will affect their costs, goals, and internal perception.
The second problem arises from the need to convince executives. They sit at the top of the organization and have the power to mandate change, but are reluctant to do so without solid evidence that investment will have the anticipated returns.
Loyalty Lab JumpStart Program
This is the reason the TIBCO Loyalty Lab JumpStart Program is such a compelling way to find success with customer loyalty marketing. We’ve created a fast, affordable customer engagement platform that allows marketers to quickly gain insights through measurable program results. We’ve added enough functionality to make the Loyalty Lab JumpStart Program very quick and easy to set up, with a low month-to-month cost and minimal need for IT support, so that marketers can quickly make their case.
When the barriers to entry are low, the chance for quick success is much higher. A marketer can have just enough functionality to create tangible proof points that satisfy organizational stakeholders and align the broader business behind the customer loyalty initiative. Where else can you change the future so easily?
Learn how to jumpstart your customer engagement program now at http://www.loyaltylab.com/jumpstart.html.
By Jeanne Roué-Taylor
For most organizations, the digital marketing budget is growing at a rate far greater than traditional technology spend, or even revenue. This represents an acknowledgement that consumer buying activities are migrating to digital channels at a faster rate than anyone expected even a short time ago. Organizations recognize the need to do something differently.
But just spending more isn’t necessarily the way to achieve success in the new marketplace. Simply putting more dollars into digital channels won’t create greater customer engagement and will in fact just add to the noise of an already noisy marketplace.
Characteristic, Context and Channel
Marketing today is less about broad-based spending and more about understanding the characteristics of the customer, the context of the moment of engagement, and the preferred channel for communicating. These are the three elements that matter more than budgetary spend and have a better shot at increasing engagement and spend.
Make Investments in Marketing Technology
The wise way to spend on marketing activities involves investment in technology and techniques that allow an organization to hit all three requirements:
Characteristics of the customer are directly tied to knowing the customer’s history and personal information. This is something a loyalty platform is exceptionally good at managing.
The context of the moment of engagement involves knowing as much about the circumstances of the customer’s interaction as possible. Is the customer online or in the store? What is their recency with the brand? Again, a loyalty platform is the technology that makes this happen.
The channel for communicating not only depends on personal preference, but the moment as well. A text may be welcome at the point-of-sale, but an email may be the preferred channel when a customer isn’t on the website or in the store. Keeping track of communication channels is best done through—you guessed it—a loyalty platform.
The changes happening rapidly in marketing are more than just a chance for a brand to spend more…they are a perfect opportunity to rethink the way a brand interacts with the customer. They are a chance to invest in a loyalty platform that can make the most of the marketing budget.
Learn more about how characteristics, context, and channel are used to engage customers at the right time in this whitepaper.
By Jeanne Roué Taylor
We’ve spent most of our lives hearing about the law of supply and demand. Brands create supply through manufacturing and the building out of service capabilities. Through marketing, quality, and some amount of skill and good fortune, our customers demand our products. Can this well-tested, age-old law survive our times? Yes, but only if it adds two more components: context and timing.
A real-time marketing system does exactly that. The new supply chain is about more than goods and transactions—it is also about relevant marketing that takes into account the subtleties of what’s happening in the customer’s world.
Thanks to fundamental shifts in technology, the new laws look something like this:
Supply – What is my current inventory level? What inventory is stressed because of low sell-through or seasonality? Where are my services overstaffed? From where can I fulfill an order that makes the most sense cost- and timing-wise? Where should I stage my inventory for most efficient sell-through?
Demand – What are my hottest items that shouldn’t be discounted? What is the market talking about, and where can I join the conversation? What can I do to better capture the interest of my customer as both an individual and a refined segment of all of my customers?
Context – What are my customer’s buying patterns: When do they shop, how do they shop, and where do they make their buying decisions? What do their patterns reveal about what they’re most likely to buy next? Where is my customer at this moment? What are the ambient circumstances, like weather, seasonality, location (in store, near store, on web or mobile) that help answer the question, “Customer, what’s going on in your world, right now?”
Timing – When is my customer most likely to be receptive to communication? Do I understand their preferences, including means of communication and timing? Can I reach my customer at the right moment with the most relevant information? Real-time must be right-time marketing.
For marketers who were previously disconnected from the supply chain world, the new laws represent an opportunity to play a much bigger role in moving the brand’s needle. The new world of retail is far more mobile, far more contextual, and far more personal, making it a much more dynamic environment for doing business.
By Jeanne Roué Taylor
In a recent post, 3 Reasons Loyalty Programs Aren’t Optional, I pointed out why loyalty programs are a critical part of customer engagement. A sudden surge in tablets and smartphones, the phenomena of Big Data, and the need for customer permission to avoid creepiness were reasons every brand needs to have a loyalty program.
But the reasons go even deeper than technology and privacy. In today’s climate of increasing choice, customer loyalty takes on many of the traditional aspects of customer service. By knowing your customer’s history, preferred channels of communication, current context and—most importantly—your service options, the chance of turning around a bad situation or delighting your customer are significantly improved (learn more in this whitepaper).
Sounds Good, But How?
Understanding your customer’s history, preferences and current context is the job of a loyalty platform for a loyalty program, but taking on the customer service opportunity requires the same knowledge of the customer. By studying customer responses with a test-and-learn approach, customer service based on customer loyalty data allows for segmentation and can be improved upon just like customer loyalty programs. It’s a win-win.
Customer service today is an opportunity to create customer loyalty in new ways and with far better results than in the past. And the best part? It is a by-product of having an excellent customer loyalty platform…and the tools are already available.
By Jeanne Roué Taylor
How well do you know your customers? While most brands would say they know their ideal shopper, how many can break down their customer engagement into finely tuned segments based on analytics? Some can, but too many are still behind the curve when it comes to having the loyalty platform to gather data, visualize and discover patterns of people and behaviors, and respond with the right engagement at the right time. Having a high level of customer intimacy enables right-time marketing and it’s within reach of most businesses (learn about right-time marketing in this whitepaper). We’ve entered a data-rich age where there are fewer and fewer excuses for not knowing your customer crowd.
For starters, every customer has unique attributes that we refer to as their characteristics. That set of information includes permanent things like gender and age, but also includes things like past history of interaction and purchases that paint a clearer picture than simple demographics. While age, gender, affluence, and other factors give us broad stroke indicators of buying propensity, finely tuned segmentation requires a richer set of information than traditional groupings.
The second aspect of knowing your crowd is tightly coupled to how your customers communicate with you, which we refer to as channel. These are the pathways of interaction preferred by your audience, and getting the channel right is the difference between having a seamless conversation and being intrusive. Brands that can’t listen and respond across the many, sometimes simultaneous, channels of today’s marketing can’t say they truly know their customer.
The third aspect of knowing your customer is having a context for each moment of interaction. Knowing whether a customer is currently in the act of shopping, at the time of purchase, or just in the information-gathering phase has a strong effect on what interactions are most appropriate and what the timing should be for engagement.
Characteristics, channel and context together are what define truly knowing your customer crowd. Without them, your ability to increase intimacy, gain loyalty, and increase total lifetime value are negatively impacted.
Watch the webinar on right time marketing and learn how to use characteristics, channel and context to determine the best time to market.
By Jeanne Roué Taylor
If you happened to be at TUCON 2013, TIBCO’s user conference, you heard about Turning Customers into Fans from Head of Client Technical Services Wen Miao. In Miao’s words, “It is no longer acceptable to have only a transactional relationship with customers.” He’s absolutely correct. We are in an age where we can use our loyalty platform as the way to capture each and every engagement with our customers.
Here are three compelling reasons why loyalty programs are no longer an optional part of marketing:
1. Mobility – Consumers are on the move and accessing information about brands from traditional sources like stores and the Web, but also on laptops and tablets, sometimes from within physical locations. Keeping track of the use of multiple, even simultaneous interactions, are impossible without a platform that listens and knows the customers voice over any channel. The same goes for outbound engagement—brands need to instantly discern a customer’s preferences, the channel for communication, and the context for each moment of engagement.
2. Big Data – The amount, variety, and speed with which data moves in today’s marketplace are growing rapidly; but so have the tools and techniques to keep track of what’s happening. Some of that data is in systems of records as transactions and stock, and some is on the move, like geolocation. Brands require a platform that can keep track of historical information, inventory and sell-through, and what’s happening now in the customer’s ambient environment. This amount of data creates analytical treasure troves that can be used to better position offers, test and learn, and increase revenue and loyalty.
3. Permission – This may be coming last, but the permissioning aspect of a loyalty program is critical to avoid being creepy. Loyalty is more than a reward for spending—it is a customer raising their hand to be part of something more than just a purchase. Loyal customers are advocates as well and spread the good word about a brand. Lastly, loyal customers are forgiving of a brand’s faults and less likely to create “negative press.”
These three reasons for loyalty programs are in themselves enough to compel most brands to start down the path to customer loyalty marketing. This reminds me of the fourth reason for loyalty programs: Your competitor has or is about to launch one.
By Jeanne Roué Taylor
Would you associate loyalty marketing with Halloween? You will when you finish reading this.
When we were kids we headed each October to the local farms to find the perfect pumpkin for Halloween. The biggest constraint was the size of the pumpkin…it was a rule that we had to be able to carry our choice to the car.
We were a highly motivated bunch, but in the end the size of our pumpkin was always a little less than we would have liked. There was always next year.
The Weight of Loyalty Data
Today’s loyalty marketing has the same challenge. We know intuitively that the more customer engagement data we can “carry,” the higher the value of our loyalty programs. We know that our customers communicate across many channels, including in stores and on the website. We also know we need to engage with them at the time, place, and through the channel of their choosing.
This is a very heavy load for the systems that were built for an earlier time.
Carrying the Load
But, there’s a way out of this challenge that isn’t available in the world of pumpkin picking. As children, we had limitations that very gradually fell away as we grew older. Customer loyalty programs, on the other hand, have the ability to surge forward and manage significantly more data by deploying a loyalty platform that scales with the need for customer engagement. Suddenly, engaging customers is much easier, whether through a mobile platform or across social media and at any time of the day or night. Loyalty marketing just went through a serious growth spurt.
There’s a fantastic opportunity emerging from the heavy load of today’s Big Data and it centers on customer experience management, supported by customer loyalty.
Are you ready to choose your pumpkin?