What tools do retailers need to build a winning loyalty program?

Sep 17, 2015

Through a special arrangement, what follows is a summary of an article from COLLOQUY, provider of loyalty marketing publishing, education and research since 1990.

Celebrating its 25th anniversary, COLLOQUY gathered a select group of loyalty leaders and visionaries and asked them to share their insights into the loyalty industry’s evolution. One of the topics explored: "Building a loyalty starter kit. What three tools are essential?"

Here, a few of the responses:

Daniel Pink, author of five books, including "Drive":

  1. A great product;
  2. Transparent process and rules. If someone understands how it all works, [he is] far less likely to complain and much more likely to be satisfied.
  3. Simplicity. Anything companies can do to save people even a step can pay big dividends down the road.

Colloquy columnists

Don Peppers, customer relationship expert, author, founding partner of Peppers & Rogers Group:

  1. The first tool is a mental model that loyalty is not the be-all, end-all goal of any loyalty program. You want customers to like you, to have an emotional commitment. Do not confuse a loyalty program with loyalty.
  2. Adopt a business model that understands the more different your customers are in either their values or needs, the more useful the loyalty program is.
  3. A program where I can redeem points for a variety of different things, maybe even with different companies. Why not let customers choose their rewards in advance and earn their points toward them? They’d get insight into what really rings my chimes.

Bryan Pearson, president and CEO of LoyaltyOne, author of "The Loyalty Leap":

Any tools that enable the company to use the data it collects to meet pre-established goals:

  1. A platform to hear your customers in real time;
  2. A system for sharing what you hear throughout the organization to reveal unexpected potentials;
  3. The capacity to deliver on the initiative’s promise.

Stores on the HeadCount Service Materially Outperform Those That Aren't

Emily Collins, senior analyst focused on customer-loyalty programs, Forrester Research:

  1. Define an enterprise-wide loyalty strategy that links to the larger business objectives and focuses on the total customer relationship.
  2. Customer insights — great loyalty strategies create an exchange of value between the company and the customer.
  3. Technology to bring your loyalty vision to life!

Seth Godin, author of several best-selling books, including "Linchpin" and "Purple Cow":

  1. Build something I’d miss if you took it away.
  2. Focus not on prizes or the transfer of value, but on recognition, on humanity; on people.
  3. Care more.

What tools do you think are essential to starting a loyalty program? Which points noted in the article are most missed in existing programs?

Please practice The RetailWire Golden Rule when submitting your comments.
"Loyalty is not a derivative of program "elements." Instead, I believe loyalty is earned through demonstrated and consistent delivery of goods, services, and fair prices. Loyalty is a sense of devotion and allegiance. Some believe this can be "bought" or "incentivized." I think not."

Join the Discussion!

8 Comments on "What tools do retailers need to build a winning loyalty program?"

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Ian Percy
6 years 8 months ago

We just can’t let this loyalty myth go, can we?

Dogs are loyal. Customers are opportunists. I don’t know quite why, but dogs continue to loyally love you almost no matter what you do. Customers, generally, will drop you like a rock if someone comes along with a better deal. Keep in mind that retail itself taught customers to behave that way.

Peppers and Godin, in my opinion, show the most insight. Peppers when he wrote “Do not confuse a loyalty program with loyalty.” And Godin for pointing out that loyalty is an outcome of love and caring.

Ralph Jacobson
6 years 8 months ago

To me true loyalty, or real “brand enthusiasm” as I like to call it, starts with a compelling reason to opt in. This can be a product and/or service offer that is NOT a traditional, un-targeted, mass discount program. For example, a consumer having a loyalty card for three food store chains just to ensure they receive the on-shelf discounts is in no way a loyalty program. This has got to be personal and continually fresh.

Tim Cote
6 years 8 months ago

The tools that are needed:

  • Sharp prices
  • Adequate service
  • Good locations
  • Good assortment
  • Good staff
Phil Rubin
Phil Rubin
6 years 8 months ago
Emily and Seth Godin come pretty close, though I do think Don’s absolutely right not to confuse loyalty with a program. Bryan’s points are valid, but the crucial miss is that you can’t “listen” to customers unless they have a reason to let you listen, and that reason is a value proposition that gets them to opt-in and be willingly tracked. We define loyalty marketing—not a loyalty program—as paying attention to customers and acting accordingly. That’s where a value proposition starts, with an explicit promise from a brand (yes a brand, as emotion is essential for any relationship that goes beyond transactional) that gives a customer the reason to believe in and trust the brand to be responsible with the customer data. Once a brand has the data, it’s got to do something with it. This is where delivering on a promise of relevant dialogue becomes viable. It’s also where Seth’s points about recognition and humanity are spot on. Customers want to see brands with the humanistic attributes that show they pay attention, care and… Read more »
Gordon Arnold
6 years 8 months ago

The first group of seemingly necessary tools that comes to mind is a crystal ball, tarot cards and a magic wand. Much of the foundation for success in rewards programs is in competition with itself as in “what card should I (the consumer) use?” The confusion of the countless offers is hard to follow to the point of a rapid decline in interest and participation. This dilemma is exponentially compounded by the fact that we are seeing a severe decrease in the numbers of credit worthy clientele.

Maybe it is time to try a cash back for cash customers program(s) or win a check for your check plan. It should only require that participants use real money and their own truly existing checking accounts to gain membership.

Shep Hyken
6 years 8 months ago

The list in this article are a darn good start. I like the list because for the most part it focuses on customer benefits. Many loyalty programs are actually marketing programs, not true loyalty programs. Understanding the difference can make a world of difference. If you take away the perks (also known as incentives) to do business with you, would the customer still want to do business with you?

Dave Wendland
6 years 8 months ago

Loyalty is not a derivative of program “elements.” Instead, I believe loyalty is earned through demonstrated and consistent delivery of goods, services, and fair prices. Loyalty is a sense of devotion and allegiance. Some believe this can be “bought” or “incentivized.” I think not.

Martin Mehalchin
Martin Mehalchin
6 years 8 months ago

I’m aligned with Daniel and Seth’s thinking. The single most effective loyalty strategy is one that’s grounded in an inherently well designed product or experience. That being said, there are industries like travel and grocery where an explicit rewards program is almost a required offering. In those verticals, brands need to be able to collect and manage a customer centric view of their data and then use the knowledge that provides to innovate within a flexible program architecture and stay in front of the competition.

"Loyalty is not a derivative of program "elements." Instead, I believe loyalty is earned through demonstrated and consistent delivery of goods, services, and fair prices. Loyalty is a sense of devotion and allegiance. Some believe this can be "bought" or "incentivized." I think not."

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