Marketers Need to Choose Their Defaults Wisely

By Jeanne Roué-Taylor

There’s a remarkable (and very predictable) fact about the human race that a great marketer accepts as truth: people from all walks of life usually take the default option when offered multiple choices. This fact makes it very important to choose default choices for your customers very intentionally, as it’s essentially one of the best “free” ways to influence customer behavior in your favor.

Consumers Accept Defaults

As an example, retailers have learned over time that the average consumer doesn’t think as much about decisions as you might expect. If you put a decision in front of them, they’ll often simply accept the default option because they are uncertain about their choice.

Applying this idea to something we all know, a common decision offered to a customer is how they prefer to communicate back and forth with a particular brand. Email is typically the default option and also the one chosen, or “accepted,” most often by consumers. This is no accident, and most marketers prefer to communicate by email. While important in retail, this concept is applicable everywhere choices or decisions are offered and responses can be influenced.

Looking Around the Industry

Surprisingly (or not), consumers are even more likely to accept more expensive options when presented as the default. Dell, Apple, and other PC manufacturers know well that customers will upgrade to more expensive options when those options are presented as the default choice on a list of options. Think of the last time you ordered a laptop and how often the larger hard drive was X dollars more and was the default choice. Having a brand-preferred choice already selected is momentum that takes effort by the customer to overcome.

You probably haven’t set up customer choices with this in mind, and should audit the places where choices are offered to see where defaults can be chosen more wisely. The positive results from restructuring default choices can be significant.

To learn more about other factors of success in retail customer loyalty, check out our webinar on the topic: Nudges, Influences and Rewards Part 2: Must-know Factors for Success in Retail Customer Loyalty.

Do You, Your Boss, and Your Boss’s Boss Agree on Your Metrics for Success?

By Jeanne Roué-Taylor

How you define success determines how you evaluate strategy and ongoing operations. This is such a fundamental point that we make it over and over again. It’s that big. Being crystal clear on what matters ensures everyone is focused on the same objectives. What’s more, the perception of your personal success depends on it.

Aligning Customer Loyalty Marketing Metrics

This comes to life when you consider a basic question: Which is more important, customer visits or customer retention? If you put your faith in visits by defining success through revenue lift over your control group, you’ll work to maximize your campaigns, potentially marketing to the same active customers over and over to keep them active.

On the other hand, if you define success by overall retention, you begin to look at your moderately active customers and ways to reactivate your declining customers. This may have a lower ROI than revenue lift in the near term, but if you’re looking at retention rate and lifetime revenue (and your boss evaluates you on this), you’ll be better off in the long term because you spent money in the right places to achieve the agreed-upon definition of success.

Do you, your boss, and your boss’s boss agree on your metrics for success? You clearly need to.

Getting Customers to Cross the Aisle

As a great example, one of our top retail customers had a well-aligned definition of success that was less about retention or visits, but instead was laser focused on cross-category selling. The company knew from its own experience that its customers had a higher lifetime value if they bought from multiple key categories. The whole approach—from a program structure to the content and engagement points—was designed to drive customers across the aisle to buy from other key categories. Cross-category sales is a tremendously successful success metric for them and has a big impact on the company’s revenue. If the company had agreed, instead, on other ways to measure success, its program would have been perceived as a failure very early on.

Gaining organizational alignment around key metrics isn’t an easy thing, but the benefits can’t be stressed enough. Agreement on what constitutes success will give you the backing to decide where to spend the next dollar of your marketing budget and the means to continue to spend, or shift spending, based on the outcome. An aligned organization is a powerful force.

To know more about factors for success, check out our webinar, Nudges, Influences and Rewards Part 2: Must-know Factors for Success in Retail Customer Loyalty.

Are You Focused on Your Desired Customer Behaviors?

When customer loyalty marketing is firing on all cylinders, the effects are indisputable. It is a given that loyalty programs work well, and they work especially well when there is a strong focus on driving specific customer behaviors. Keeping those behaviors front and center can be a challenge, but is a key factor for success in customer loyalty.

Desired Customer Behaviors

Saying that customer behavior is changing rapidly is an understatement. The forces that drive and shape consumer behavior are evolving as rapidly as the technology that allows consumers to shop, compare, and buy anywhere and everywhere. It could be chaotic (and it is for some); but, in the midst of the storm, customer loyalty marketing offers a uniquely valuable way to determine and map desired customer behaviors, and then develop the incentives and frequencies that reinforce them. With so much at stake and so much change, there’s really no alternative.

Spectrum of Desired Customer Behaviors

While revenue (a purchase) is clearly an important desired customer behavior, there are a host of others that can be important, depending on the circumstances of both the brand and the buyer. Desired behaviors can include downloading the mobile app, opting in to mobile notifications, or opening the mobile app when near a retail location. These are just a few examples that set the stage for driving customer behavior in a direction that benefits the brand. Each marketer needs to have a concise list of what makes a difference for their business, and to make sure this is where time and effort is focused. Only by concentrating on the customer behaviors that matter can a marketer move the needle in ways that drive customer loyalty success. Know your desired customer behaviors and put your energy into making them happen.

Learn more in our webinar series: Nudges, Influence and Rewards: Must-Know Factors for Success in Retail Customer Loyalty.

Why Haven’t You Defined Customer Loyalty Success?

We’re way beyond the point where the world debates whether customer loyalty works.  When we think about customer loyalty’s broad goals, whether the focus is on retention or brand affinity, investments in customer loyalty have shown repeatedly to provide a very strong return. So everyone is measuring that success, right? No.

What Are Your Goals?

The idea that customer loyalty works may seem obvious to some, but many sophisticated programs in place today lack clarity and fail to answer the simple question, “When we look back a year from now, what will have happened to say we achieved success?”

Without a clear definition of customer loyalty success, there is real risk that great, successful programs will be undervalued and underfunded, and—even worse—that programs with poor success rates will continue, wasting valuable and often scarce resources. Success needs to be defined through clear planning and objective measures, meaning the only guarantee of success is through clarity of both purpose and intended outcome.

Have You Defined Success?

Having a good definition of success—whether the goal is retention, shopping frequency, preventing high-value customer erosion, basket size increase, or another target—is foundational to every other factor. Know your problem clearly and choose a definition of success that directly addresses the issues or goals you’ve chosen.

Hear more on defining success for customer loyalty from Michael Greenberg in the webinar, Nudges, Influence and Rewards: Must-know Factors for Success in Retail Customer Loyalty.   

The World Cup Reminds Us That Marketers Are Architects of Passion

Watching the World Cup 2014 in Brazil is an excellent reminder of the power of passion and the role of marketing. World Cup passion is found on the football pitch, in amazing quantity in the stands and streets of Rio, and in pubs and offices around the world. It would be safe to say that the tournament has become synonymous with passion, excitement, and shared experience.

The Roots of Passion

In the World Cup, passion comes from players and fans putting all of their energy into something bigger than themselves. For a short period, footballer players aren’t free agents taking in millions—instead, they are playing for their countries. None of the passion of the World Cup is accidental, and there’s an enormous amount of work that goes into whipping it up and serving it. This is no different than what happens between a strong brand and its most passionate customers. Today’s marketer needs to be an architect of passion.

Passion Defines

For consumers, passion drives nearly everything they do—what to eat, what to wear, and how and where to spend their time. Connecting with that passion involves making the brand a part of how consumers define themselves and live their lives. Tapping into it requires a different flavor for different products and services, but here are common ways to foster and benefit from consumer passion:

  • Create a strong, omni-channel loyalty program that ‘returns the favor’ for your customers’ business.
  • Give your customers an outlet for expressing their passion that includes social media.
  • Capture the context of your customer’s buying moments, and serve the most relevant interaction possible.
  • Find ways to surprise and delight your best customers and draw them even closer to your brand.
Fire up your customers by stoking their passion, and turn them into fans! For more ideas on how, download our whitepaper, Marketing Transformed: Big Data Sciences and the Revolution of Customer Engagement and Loyalty.

Using Nudges, Influence, and Rewards For Marketing Success

By Jeanne Roué-Taylor

Success in customer loyalty marketing doesn’t arrive from just a single contact with a customer or even from a single approach to interaction. Customers are growing more savvy every day; their expectations are shifting. Marketers need to know and take advantage of the many different factors that will draw in and delight, and—most importantly—the factors that will increase customer loyalty and lifetime value.

Nudges, Influences, and Rewards

Customer loyalty marketing is all about working to make a brand top of mind, the first place customers thinks of for spending their money. Success comes from using a series of well-timed and relevant nudges, finding places and channels of influence and creating rewards that drive customer spending behaviors.

There are key things to know before you can expect to find success,  including:

  • Critical pieces of program setup
  • Investing in the right places
  • Generating customer insights
  • Building your context platform
  • Increasing meaningful frequency
  • Effecting racking and monitoring

Join me for a webinar with TIBCO Loyalty Lab’s Michael Greenberg as he takes us through the critical factors best correlated with success in customer loyalty marketing. Greenberg is an expert at laying out the latest successful approaches to customer loyalty marketing and has extensive experience with top international retail brands. I hope to see you there. Register here.

Get Creative With Customer Engagement and Loyalty!

By Jeanne Roué-Taylor

Just yesterday I was in one of my favorite stores, a nationally known co-op. The benefits of membership at this retailer are very straightforward—the more I spend, the more I can expect to receive back at the end of the year. I happened to get a manager as a cashier, and she suggested the store credit card and reminded me of the cash-back benefit of being a member. She was enthusiastic, so I thought I would try out a few suggestions on her. It went something like this:

Me: “Thanks, I’m already a member, but I have a couple of questions: Why don’t you have achievement levels and published milestones for members?”

Manager: “We want all of our shoppers to earn benefits on the first day.”

“Can’t they do that and still be rewarded at increasing levels for bringing more of their business to this brand?

“Yes, but wouldn’t that have to be paid for somehow, meaning the lower-status customers would suffer?”

“What if you could change the math? Wouldn’t rewarding higher purchase levels incent customers to bring more of their shopping to you, increase your average basket size, and also repay your cost of customer acquisition sooner with larger average business per customer?”

“I guess that could.”

“So let’s just play that out. What if status levels could give you another layer of segmentation of your market and an ability to test personalized messages? Wouldn’t that allow you to better engage your highest-spending customers, making them feel rewarded for their high level of loyalty?

“Yes. I can see where you’re going. What’s your name?”

This was one of many conversations I have had when I shop in the stores that aren’t getting creative with customer engagement and loyalty. I’m there for convenience and because I like their offerings, but they’re missing the big picture with me (and losing a chunk of business to other retailers). There is a world of opportunity for brands to not only know their loyal shoppers well, but to use creative ways to tease out the many natural segments within their customer base.

Those segments provide a remarkable platform to test and learn the best ways to build a 21st-century business. Besides, chances are your competition is headed that way.

Creative engagement requires advanced analytics. Learn what you need to know in this webinar co-presented by TIBCO Loyalty Lab and TIBCO Spotfire.

Demandware and Loyalty Lab: Seamless E-Commerce and Customer Loyalty

By Jeanne Roué-Taylor

Context is quickly becoming the definitive item that makes the deeper relationships of e-commerce and customer loyalty so attractive to brands. That attractiveness is justified by the amount of contextual information that can be gleaned from customer relationships when the personalized data of loyalty programs meets the in-the-moment experience of e-commerce. The TIBCO Loyalty Lab integration for the Demandware Commerce platform makes it easy for brands to develop and launch a powerful customer engagement program, and gain that rich context faster with fewer IT resources than ever before.

E-Commerce and Loyalty 

Loyalty is a great match for e-commerce. The marketplace has higher expectations each and every day as more customers access more information across more channels, around the clock. Each commerce touchpoint is an opportunity to strengthen the customer engagement experience in ways that create better segmentation and more precise targeting while also offering a better customer experience.

This has to be a seamless experience for the customer across all channels. Customer loyalty programs are the perfect way to create right-time engagement while making your customers an enthusiastic part of the equation. As a bonus, customers who feel loyal to your brand are true fans and willing to be your brand advocates.

TIBCO Loyalty Lab is now a certified Demandware LINK partner. As a result, customer engagement attained through loyalty can be a part of a richly combined and seamless loyalty, browsing, and shopping experience. The loyalty information, vital to engagement and personalization, is used to present offers in the Demandware Commerce platform. Purchase data, key to segmentation and targeting, is sent to Loyalty Lab. We’ve empowered marketers to connect nearly any customer-facing touchpoint with the best possible way to motivate profitable customer behavior.

Download the datasheet to learn more.

The Stats on Customer Retention Are Shocking

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.

Learn more from our webinar and whitepaper on Customer Loyalty Management.

Why Customer Loyalty and Why Right Now?

By Jeanne Roué-Taylor

During a recent trip to the grocery store, I commented at the checkout that I always receive coupons for baby food and diapers along with my receipt. I said sarcastically to the clerk, “You’d think I shop for those things and they know it.” The clerk nodded and completely seriously said, “I know, right? It’s like they’re watching everything. Doesn’t it seem creepy?” I had to laugh, but not until I was out of view. Like any period of rapid change, not everyone is fully briefed on the latest events in the digital revolution.

So Much Change

The clerk’s response isn’t all that surprising in the retail world, where so much is changing so quickly. As McKinsey said recently, we’re in the middle of a data analytics revolution. Everything we thought we knew has changed, and our ability to know the customer and tailor offers and other interactions is remarkably strong. Not everyone, the clerk included, realizes that customer loyalty is the opposite of creepy. In an era where so much can be known, predicted, and acted upon, loyalty programs are the only way to help the customer to feel comfortable with a brand’s knowledge of their habits and personal information.

Giving My Permission

A brand I feel loyal to, like my local grocery story, has my permission to track my spending patterns and to make offers on the products I’m most likely to buy or be willing to try. I look forward, in fact, to seeing what discounts and other deals they have in store for me. Think back to “coupon packs” and newspaper fliers of just a few years ago, where the majority of items were unlikely to catch our interest, and you’ll see just how far loyalty programs have come. Today’s programs have outgrown the simple points and plastic of yesterday’s brand loyalty and are executed as an integrated, marketer-friendly, data-enriched, real-time system.

A Loyalty-Driven Revolution

For retail, the digital analytics revolution that McKinsey talks about is loyalty-driven—it’s that simple. Brands that don’t invest in smart customer loyalty management risk breaking trust with their customers and losing business to the competitor who does.

To learn more, download our whitepaper on Customer Loyalty Management.