BrainTrust Query: How Should Loyalty Programs Extend Digitally?
Through a special arrangement, presented here for discussion is a summary of a current article from the Hanifin Loyalty blog.
New communications channels (Facebook, Foursquare, Twitter) can be easily plugged into a loyalty program. But the question remains, which channels are the right ones to connect and how do marketers know which to choose?
I’ve noticed a pattern emerging relative to new product and technology launches. Whether in reaction to new consumer technology ("I’ve gotta get the latest iPhone") or business platforms (e-CRM, Gamification, location based marketing), it goes like this:
- Near feverish pursuit of adoption that seems to imply, "I’ve got little time for absorbing the entire argument. Let me just write the check and get started";
- Retrenching as buyers take a step back to evaluate post-launch criticism and early failures in order to limit their own risk;
- A second wave of adoption that is better informed, goal driven, and focused on creating a return on investment rather than just a big noise.
In the advent of social loyalty, marketers everywhere were rushing to build Facebook pages, open Twitter accounts, and claim their locations on Foursquare before they had any idea where these efforts would lead. Building awareness, laying claim to an audience, and matching competitive moves were the primary motivators of early experiments linking loyalty with social media.
Research has made clear that intelligent and discretionary selection of social channels as means of communications with loyalty program members is what’s needed to succeed. To just declare that your firm is taking an "omnichannel" approach to marketing seems to ignore the messy details of implementation.
New research published by the Logic Group in the U.K. cites additional evidence that while consumers are building their faith in all things digital, some hesitations can’t be ignored. Survey results showed that only 21 percent of U.K. consumers confirmed their desire to receive loyalty program offers through mobile and social networks, but double that number flatly rejected the new tech channels for this purpose.
Adapting your loyalty program to meet customers where they are and communicate with them in the channels they prefer can be determined by trial and error, but the process is made more efficient by simply asking them. Now is a great time to reevaluate the data you collect in the program enrollment process and how you manage online profiles.
Be prepared to give away incentives to tap deeper into the preferences of your best customers. The results are valuable to you as a business and the consumer is increasingly aware of that value.
Discussion Questions
How much potential do you see for social media to significantly enhance existing retail loyalty program efforts? What are the best ways for retailers to determine their customers’ acceptance of social media as communications channels?
Ubiquitous access to loyalty incentives when and where a customer would like to interact will be paramount in the design and consideration of key program elements. The question of determining customers’ interests and desires to have new media options available is somewhat a no-brainer … ask them. After all, they represent a retailer’s most loyal patrons and will be delighted to offer their input.
Facebook still is not a place shoppers go for info while on the path to purchase. It has more relevance to brand perception and website visitation (based on research I did from Compete data). Twitter has more relevance to promotions as they spread there more readily.
The Procter/Costco promotion from a year or two ago gives us a roadmap. If you entered your Costco club card number and mailing address you got a package of samples from Procter. that seemed very effective.
Implementing an omnichannel marketing and customer communication that has meaning and substance from your customer’s point-of-view is not easy.
Not surprisingly many retailers and brands are claiming that they are taking the ‘omni-channel’ approach because they are, as noted, rushing to create a Facebook page, a Twitter account, putting links to YouTube and Pinterest pages on their website.
A successful omni-channel approach is about implementing a holistic communication strategy that provides a consistent, relevant and personal brand experience integrated across ALL available channels from your customer’s point-of-view. That includes the print channels- not just traditional digital interactive channels.
Loyalty is not measured by “laying claim to an audience” but rather a valued and sustained bidirectional communication between a brand and their customers—and it is measured by ‘share of wallet’.
The best way to extend loyalty programs digitally is through gamification and virtual currency.
Provide “points earned” from activities that can be redeemed for samples/demos, offer exclusive access to private sales and offer a first shot at newly released products.
What I’m hearing about social media is the attempt to nag the customer without offending. I do not think attempting to infiltrate social media with commercial messages is a good strategy.
The social media potential—from my read—is low if retailers lift their online shopping key areas including low prices, free shipping, and easy to use websites.
IBM’s reports in USA Today (back in November) stated that social made up less than 1% of online traffic and sales on Black Friday. This was sourced via the sales IBM tracks for 500 of the top retail sites. This is a drop from last year (2011).
Social seems to be a larger player as the shoppers hunt for the best price/deal. So, lots of metrics, reports, tools, and more, but retail is very much an art. As an art, social is another “brush” in the hand of a good retailer (estimate the CMO has most of the brushes). Use social—the “social” brush—in a manner that you can measure and understand and try to lift sales across a targeted group.
Also, clean the brush well so you do not create “social noise” or overdo the social aspect.
I see a disconnect here; we’re trying to argue about whether loyalty programs should use new digital/social channels by using a *survey* of consumers, rather than using actual engagement data.
Perhaps the single most important aspect of these new channels is that they are measurable. Why ask someone if they want to receive loyalty communications via Facebook when you can simply run some experiments and get the real answer? If I say I don’t want to get loyalty notices by Twitter, but I retweet them anyway, then my survey response is just wrong.
If you are going to embrace digital, embrace digital.
The problem with loyalty programs is that they are sometimes just a marketing or discount program that is disguised or called a loyalty program. For any loyalty program to be about loyalty there has to be some emotional hook between the retailer and the consumer. Discounts and points are “icing on the cake.”
Social channels make accessibility between retailers and consumers easy. Certain demographics will connect with certain channels, so it is important to be where your customers are.
A customer that is on Facebook might have a completely different experience than one that just chooses to receive emails. It’s the difference between pushing information and interacting. Pushing information is more about promotion. Interactions and engagement allow for a better connection. Making the interactions more about the relationship and not about the promotion can be what creates the emotional connection that creates true loyalty.
Not all customers are actively part of loyalty programs, and the broader audience tapped into social media messaging is a bigger opportunity. There is an area of opportunity to communicate messaging on incentives and the value proposition to casual customers or prospective customers, and then measuring the effectiveness of leveraging digital channels to convert more people into loyal customers.
Without giving an opinion from the “business perspective” on the issue, I am struck that the answers given so far are not from the views of the shopper. No one has spoken to this from THEIR views as a shopper. I know that for me, I still find Amazon’s messaging to me to be the best. Targeted, based on performance, suggestions, etc. It is not ALWAYS on target (sometimes I buy a gift for someone else that has needs or interests different than my own), but I think the potential for reaching ME via social media is best when it is specific to me and not a generic one size fits all approach.
Getting “this week’s specials” from a retailer are rarely of interest to me because it is so “hit or miss.”
If you view your loyalty program as merely a tool to offer targeted discounts, then yes, those survey results from the UK are about what I would expect. As a consumer, I get plenty of offers already and I certainly don’t want to encourage retailers to hunt me down wherever I digitally hang out.
However, if you view your loyalty program as a way to actually generate delight (which ultimately leads to loyalty—loyalty is an outcome, not a lever), then the opportunities in social channels become enormous. How about an invite-only Facebook page or Linked In group—or dedicated community site—for your loyalty customers? Where you give them access to content that they can’t get elsewhere—new season previews, pictures from new store designs, insights from merchants and marketers as to what’s hot and coming soon. And yes, maybe the occasional offer.
The point is, social media is social. So approach loyalty in social spaces as a place to build the tribe. Not a place to harass your customers with even more offers.
Customers are increasingly becoming dependent on technology and start taking many things for granted. I choose to provide my location information to my phone and expect it to return results relevant to me. Similarly, when I say something on social media, I want the companies to hear. When customers are providing so much information about themselves, retailers need to listen and tailor their loyalty efforts for the customer. This is an era of mass personalization. This is era of recognizing “me” and that’s the way to build loyalty—by making customers feel “They get me.”
One of the crucial steps for this is recognizing customers. How do you find out that the customer who shops at your store, also shops online with you and tweets about you and shows of the product recently bought by sharing a photo on Facebook. Connecting these dots is essential for a successful loyalty program. If the offers are not personal and relevant, marketing efforts would be nothing but spam and this could be quite irritating on social media for the customer.
Do you mean: How can retailers use social media to increase lock-in?
Towards that end, Ed Dunn’s on a track regarding Gamification. I am not into the addictive nature of this, but that’s what Foursquare or other check-in sites rely on.
If retailers co-opt the check-in concept to their stores, I suppose they could place Bluetooth/NFC/QR Code/whatever—beacons in departments and track and reward shopaholic behaviors and broadcast them on Facebook as in: Congratulations! You were the first/fastest browser today—you are a power shopper!
Identifying services or special treatment for the ‘mayor’s’ or other category leaders also comes to mind, but that’s service innovation—just a thought.
Foursquare rewards the Mall Rat so why not extend check-ins to in-store locations. Track and reward behaviors over the year. Perhaps you can reward someone who visited on each of your promotions, they get the savvy shopper badge. Or perhaps you could reward visits where multiple friends shop and check in together.
These are all attempts at acquisition—you still need to activate the Attention/Interest/Desire/Action cycle—but you have the first frames of the storyboard.
I suppose you are really asking two basic questions:
a. how best to track engagement
b. how best to reward engagement
Perhaps it would be best to leave all options available here. Makes me wonder why Sensormatic doesn’t partner with Foursquare for those who want to opt-in. Location based reminders also come to mind.
On the other side of the coin—loyalty is such a great virtue! I think it would be very cool if retailers developed campaigns that reward loyalty that relates to the values they foster and represent—loyalty to the community, family, students, first responders, caretakers—social media is very good at this kind of thing.
As the literally hundreds of social channels settle into a successful few over the next 18 months, and each one has its own purpose (microblog, friending activities, shopping, etc.), there will be a greater portion of the consumer marketplace that utilizes social channels regularly. This will be greater and greater incentive for retailers and CPG firms to develop compelling loyalty programs.
Social listening tools available today already are the best ways for merchant and CPG firms to determine their customers’ acceptance of social media as communications channels. Innovative companies are discovering insights that are truly demanding significant changes in their marketing strategies.
As Nikki pointed out, loyalty is built by generating value for the customer beyond discounts, and social is a great vehicle for providing more value to select customers, e.g. through designated communities. Being invited to a “virtual advisory panel,” for instance, can be a terrific way for a company to get input from its most loyal customers, while making them feel heard, helpful and important—key motivations for engaging in social channels in the first place. This type of engagement with loyal customers can even extend to co-design or co-creation, which social channels will increasingly be leveraged for.
It’s the proverbial push vs. pull quandary. Loyalty is or should always be permission based. Social platforms positioning themselves as loyalty enablers is a false promise. Engagement as we all know comes in many forms. Not being “in your face” when it comes to social is in general the right strategic/tactical move. Put the engagement opportunity out there for members and non-members alike to “like,” share and register for promotions, sweepstakes, feedback on product, user experience, referral and even offer/ discount benefits—but don’t scream it, don’t get in the way of the dialogue that one user has with another.
The business of social should be among people, not between the customer and the business.
Part of the failure point of social media when it comes to customer loyalty and relationship marketing is a function of misunderstanding customers and the medium itself.
Customer acceptance of social as a branded channel is not going to get easier (quite the contrary, actually) unless or until brands start listening to what customers are saying via social. Today most do not and they try to take an channel meant for individual interaction and turn it into something akin to advertising.
The brands that are succeeding are not solely spewing irrelevant and un-targeted content (i.e., mostly offers) re-purposed from email; they are listening and interacting with individual customers accordingly.
Loyalty is a hard word to pin down. As others have noted, much of what we call loyalty lacks emotional connection. Let’s call most retail loyalty programs what they are—purchase incentives.
Successful incentive programs rely on the ability to target messages and offers to customers based on behavior. Club cards have moved beyond two-tier discount programs by identifying shoppers before they purchase, not at checkout. But this requires customers to provide addresses, digitally opt-in to programs (mostly email), or pre-visit retailer sites before their store trips.
Social media, namely Facebook, lacks the ability to target different messages to customers based on behavior. In that respect they fall short. The best way they can help identify customers upstream is to encourage participation in opt-in or pre-visit programs. Many companies have used tabs in Facebook for this purpose. Over time behaviors can be identified.
To find a digital trend that is having a bigger impact on individually targeting shoppers, look to mobile instead.