Through a special arrangement, what follows is a summary of an article from COLLOQUY, provider of loyalty-marketing publishing, education and research since 1990.
Straightforward loyalty programs can no longer be viewed as the single most powerful tool for engagement. This is where multi-motivators come in. The trick is balancing the right number of programs and maintaining the intelligence to run them all effectively and profitably.
The strategy involves employing various promotional activities, including weekly sales, exclusive benefits, seasonal promotions and contests, to run along with a loyalty program.
"We think of loyalty as an ecosystem, not just a program," said David Zychinski, senior manager of loyalty strategy and insights, Walgreens, at the NRF Big Show. "It's about rewarding our best customers for making Walgreens their health and well-being destination."
He partnered with Caroline Papadatos, SVP of international corporate marketing at LoyaltyOne, to discuss the multi-motivator approach in a session entitled, "Motivating Behavioral Change with A Loyalty Strategy."
To reach its best customers, Walgreens employs direct and indirect methods. For example, its quarterly direct mail campaign, called Thank You, offers highly personalized sets of offers. Its Balance Rewards for Healthy Choices, a subprogram of its Balance Rewards program, rewards members for purchases and other non-transactional activities. And receipt and e-mail offers reward a broader group of customers, encouraging behavior change.
"What we found is it does build loyalty," Mr. Zychinski said of Walgreen's direct offers. "Those customers just become better customers." Such efforts require a major investment, he said, which served to segue Ms. Papadatos into the topic of effective multi-motivator strategies.
She illustrated how one consumer, a student, might not appear to be a high-value customer unless the merchant looks at what she buys, which might include a category of high-margin products. Then if the merchant looks further at her category behavior, she looks like a mother. And if her redemption activity is examinied, she is a world traveler.
Such individual complexities are causing data investments to outpace loyalty investments.
Yet even the best loyalty programs may not appeal to everyone. "To get that other 50 percent of customers, you have to expand the motivator set," she said. Done well, such programs can generate 3 percent to 5 percent lift in sales over a sustained period. Promotional pricing alone could translate to a 2 percent to 5 percent increase.
Ideally, merchants will shift from running six or seven initiatives to operating an integrated platform that allows them to see the benefits of each motivator underway, Ms. Papadatos said, "Because data is not a decision tool if you have six or seven decisions and no way to prioritize."