BrainTrust Query: Loyalty Marketing Needs a Revolution
Through a special arrangement, presented here for discussion is a summary of a current article from the rDialogue blog.
"The revolution will not be televised. The revolution…will be live." – Gil Scott Heron
It’s been over three decades since American Airlines introduced AAdvantage and launched the era of modern loyalty marketing. Yet after just attending three important loyalty conferences in Europe and North America, there is still way too much focus on this traditional model for loyalty marketing. The world has changed, especially for brands and marketers, and it is time that loyalty marketing starts to lead and not follow.
For loyalty marketing to be relevant in the C-suite and change how companies and especially retailers go to market, it needs a revolution.
The raison d’être for loyalty marketing — identifying customers (via opt-in), understanding their current and potential value, and then treating them differently — still seems to be missing from most companies’ loyalty and relationship marketing practices.
Even with the sweeping changes in media, technology, consumer habits and behavior, most loyalty programs today are not fundamentally different. They are still focused on hard benefits discounts, with soft benefits few and far between.
It’s too much mass direct marketing; not enough true relationship marketing.
Further, the impact of social media requires a different approach. In contrast to one-dimensional loyalty programs, social creates a dynamic, customer-differentiated experience that recognizes a range of interactions in a customer’s relationship with the brand. Meanwhile, loyalty remains stuck in the paradigm of a stop-and-go experience that rewards "spend" with "get."
So what should the revolution, and the future, look like?
Loyalty "programs" will be increasingly invisible, with published programs on the wane. Published programs are not going away, but they will be increasingly overshadowed by what happens privately between brands and select customers.
Relationship marketing wins. The sustainable profit from loyalty comes not from the published program itself, but from the relationship marketing and promotion that it enables. This is a fundamental shift from mass discounting and mass marketing via channels like e-mail (or worse, Groupon).
Customer experience should more consistently sync with the brand promise. A loyalty program won’t fix a bad customer experience, so it’s imperative that loyalty strategies extend beyond programs to include the customer experience. Customers have short memories, so when brand experiences are overly transactional there’s very little emotional imprint. Emotion, which comes from experiences and relationships, trumps points and rewards.
Revolutionary loyalty "programs" will be:
- Unpublished, real time and difficult to replicate
- Built on proprietary data and insights
- Able to recognize customers accordingly
- Driven by customers not brands, in social as well as all channels
- The largest organic growth engine available to a company
Discussion Questions: Ideally, how do you see loyalty programs moving past points and rewards structures? Which of the suggestions in the article seem most feasible and which face the biggest hurdles toward adoption?