What Modern Loyalty Really Means
What Modern Loyalty Really Means
To acquire and retain customers, brands must deliver unique, individualized experiences.
Why read this paper? Points-based loyalty programs that reward customers for dollars spent or frequent visits are no longer a market differentiator. Modern loyalty programs aren’t just about rewarding customers for certain behaviors, but also aim to present individualized customer experiences. And they take their cue from the past. After all, before the dawn of online shopping, people had to shop at stores where proprietors knew their customers’ preferences and catered to them. In much the same way, today’s marketers must: • Know customers’ preferences. • Pinpoint current and prospective values to the brand. • Market in a manner that engages each customer on an individualized basis.
Modern loyalty programs aren’t just about rewarding customers for certain behaviors, but also aim to present individualized customer experiences.
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What Modern Loyalty Really Means
Categories of Loyalty Programs The way a brand rewards and communicates is contingent upon many variables, including demographics, socioeconomic status and purchasing behaviors. In general, there are three types of reward systems within a loyalty program: • Points as Payment: Customers earn points they can redeem for certain benefits, such as discounts or free items/services. Airlines, grocery stores and credit card merchants often use this strategy. • Surprise and Delight: Customers receive unexpected offers, discounts or invitations seemingly serendipitously. With surprise-and-delight rewards, the customer doesn’t react to a specific prompt with a specific action to receive a specific reward. He or she doesn’t know what’s coming (surprise), but the reward is in line with what he or she would want (delight). More brands are evolving their loyalty programs to include surprise and delight. • Royal Treatment: Giving customers premium treatment when they’ve done something remarkable (exceeded their spend threshold, referred customers, etc.) in relation to your products or services increases goodwill toward the brand. Premium treatment tells customers they are valuable in a way that’s different from others who aren’t enjoying the same perk. Over time, customers associate these premium experiences with the brand, which cements their loyalty. Certain airlines, hotel and casino brands have mastered the art of royal treatment. What constitutes an individualized marketing experience today is vastly different than it was 10 years ago. Whereas using an individual’s name in the salutation of an email campaign was once novel and effective, that level of individualization is now underwhelming. Today, brand affinity increases through much more individualized experiences. In addition, individualization must address the customer’s interaction with the brand and his or her expected level of involvement in the future — all of which go beyond a name (no matter how unique the spelling!) Modern loyalty is about the way a brand engages customers daily. It has transcended promoting brand affiliation to focus on influencing behaviors and outcomes for true business results.
Modern loyalty has transcended promoting brand affiliation to focus on influencing behaviors and outcomes for true business results. Engage Customers as Individuals To promote an individualized experience, brands must deliver one-to-one marketing as often as possible. To this end, strategy has moved from focusing on the customer journey to promoting action that creates a unique relationship between the customer and the brand. How is this achieved? Ansira takes a customer-centric approach to understand who customers are, how they engage with the brand, what they expect and where they are in their purchase cycles. The customer experience is a system of dynamic interactions, rather than a linear journey that begins with enrollment and ends with advocacy.
Terms to Know
Customer Relationship Management (CRM): A robust engagement marketing program that incorporates all available data to provide insight into a customer.
Customer Lifetime Value (CLTV): A measurement that represents the customer’s present and future values. Expected Customer Lifetime Value: Forecasted CLTV based on attributes a person shares with others in a particular CLTV group. General Store Experience: Individualized marketing based on a brand’s knowledge about a customer.
In the past, when brands wanted to influence behavior, marketers would build customer journeys and lead customers to specific actions. Now we go beyond the 2
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What Modern Loyalty Really Means
customer journey to focus on the entire experience, reacting to where customers organically go within the brand experience by paying attention to channel, frequency, social sentiment and more. Customer-brand relationships are built with data-driven strategies that begin with knowing the customer exists and evolving once the brand gets to know him or her on a more personal level. To help brands reach customers as individuals, Ansira takes an integrated approach of combining loyalty with customer relationship management (CRM) solutions to provide and promote rich experiences. Ansira sees CRM as a robust customer engagement marketing program that incorporates available customer data (such as name, phone number and email) as well as third-party data that can provide insight into a customer. With CRM tools, Ansira can create brand interactions and scenarios based on individual preferences, moving the customer down certain paths to maximize the opportunities to buy more, buy more frequently or even affiliate with the brand for a longer period of time. Within each relationship is a boundless number of possible paths or touch points, giving each customer the opportunity to create his or her own experience based on preferences, channel and message. Because brands can communicate with customers in a variety of ways (whether that’s via a mobile app, upon visiting a website or in response to a tweet), at different times of the day and with varied tempos, they can foster individualized customer experiences. Ansira leverages CRM to foster a brand’s ability to know what a customer is doing, and this ability has improved exponentially over the years. The information collected is more customer-specific and has greater depth and breadth, allowing brands to leverage that information to reward customers on individual terms.
Ansira can create brand interactions and scenarios based on individual preferences, moving the customer down certain paths to maximize the opportunities to buy more, buy more frequently or even affiliate with the brand for a longer period of time. The Intersection of CRM and Loyalty Loyalty and CRM have been moving toward an intersection for years. While marketing used to be siloed across channels — brand marketing, TV marketing, e-commerce/mobile marketing, etc. — all facets of a brand can now work in concert. Ansira helps integrate the disparate marketing channels via an orchestrated course of action. Our modern loyalty programs take a “watch and listen” approach to gain information, and then we release the right communication at the right time to entice customers to react. The communication can be anything from discounts and free items to soft rewards, such as priority placement in line, room upgrades or private events such as a hotel happy hour.
Loyalty and CRM have been moving toward an intersection for years. Understand Current and Future Customer Habits When CRM was first introduced to marketers, the focus was on leveraging basic personal information (age, gender, email, phone number, etc.), but over the past two decades, it has evolved to include transactional information, such as purchasing patterns, amount of spend, frequency of purchases, customer sentiment, etc. That information is aggregated and archived in a database and leveraged to shape messaging, channel and specific offers designed to influence behavior. Software companies provide the tools to systematically implement 3
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What Modern Loyalty Really Means
the data, and monitor either manually or automatically, depending on the situation and client. Behind the scenes, Ansira analyzes the data to discover attributes of the customer. Based on scoring and statistical models, Ansira can understand who the customer is today and what kind of customer he/she could be in the future. For example, vehicle maintenance retailers that offer oil change services can leverage customer data to determine what offers will best influence a customer to take immediate action. Since customers often use price to choose where they go for an oil change, the company may offer a discounted rate. The reality of saving money gets the customer in the door, and subsequent offers for ancillary services, like brake replacement or an inspection, drive incremental purchases. For the longer term, brands can leverage statistical models to predict which additional services would benefit their customers (or potential customers in the household), send offers based on that information, and then reward purchasing patterns accordingly. With CRM solutions, Ansira can create opportunities to influence the customer’s relationship with the brand throughout his or her life cycle, whether those opportunities focus on getting that customer on board with a brand, finding ways to upsell and cross-sell, identifying ways to retain that customer or re-earning the business after the customer leaves the brand.
In short, CRM provides the runway for modern loyalty to take off. The concept of CRM is the same today as it was 20 years ago, but at that time brands could handle only top-tier customers. As brands aspire to market one-to-one — to watch a person as he or she interacts with a brand and then send special offers to continue the buying behavior and brand affiliation — the technology must be cuttingedge. CRM has advanced enough so that marketers can leverage granular data to achieve results in scale.
Based on scoring and statistical models, Ansira can understand who the customer is today and what kind of customer he or she could be in the future. Create a “General Store” Experience Remember the days when people strolled into a corner store and the person behind the counter knew each customer’s name, what items they were likely to purchase (maybe even have them bagged and ready for checkout) and took a moment to engage in a personal conversation about work or family? The notion of a “general store experience” is the foundation for one-to-one marketing. Ansira helps brands move away from segmentation and tiered customer groups to talk to individuals as individuals. As customers move naturally around brand marketing channels and touch points, whether forward or backward, Ansira watches and delivers tailored messages designed to influence behavior. If Ansira sees that a customer’s buying habits change from his or her norm, attempts are made to re-engage the customer with new rewards. For example, if a customer hasn’t visited a restaurant in a while, a surprise-anddelight reward for a free breakfast item may be sent. Or, if a customer’s purchasing tendencies match other customers who shop more frequently with the brand, increases to the cadence or richness of offers to entice incremental spending might be recommended. Collecting and analyzing data makes this possible. The integration of type of reward, message, communication strategy, channel and experience is key to supporting the customer’s experience. Every component must be carefully orchestrated to deliver an experience unique to a specific customer. Data drives these individualized experiences, but collecting information is only part of the formula. Leveraging the information and using it to connect all aspects of the brand experience, from channel preference and time of day to frequency and creative execution, is essential for engaging customers so they will want to experience the brand for the long term. 4
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What Modern Loyalty Really Means
Customer lifetime value is a measurement that represents the customer’s present and future values. The Key to Market Differentiation Data-driven marketing is sophisticated and complex, but successfully leveraging information can change the sales equation for a brand. Ansira helps clients create customer experiences that align with brand objectives and influence customer behavior.
The notion of a “general store experience” is the foundation for one-to-one marketing. Using Customer Lifetime Value to Influence Outcomes With a data-driven marketing strategy, a brand can score and measure customer activities and create a framework for the customer relationship. One tool in the arsenal is customer lifetime value (CLTV), which is a measurement that represents the customer’s present and future values. CLTV is determined by an analysis of a customer’s historical spend and frequency with a brand, as well as forecasted spend and frequency. Modern loyalty programs, and engagement marketing in general, are designed to increase CLTV over what is expected. As the customer stays with a brand longer or spends more (or both), CLTV goes up.
Today’s marketplace is saturated with loyalty programs of all kinds, and consumers need to feel their time and effort are validated by rewards that really matter to them, which is why modern loyalty programs leveraging CRM solutions are so important. The key to differentiation in today’s marketplace is to create an individualized brand experience — one that enables the brand to separate from the pack, stand out and sell. Visit Ansira.com for more on customer engagement services and thought leadership. Follow us on Facebook and LinkedIn.
Another strategy for using CLTV is to look at expected CLTV. Statistical models can forecast what a person’s CLTV will be, based on attributes that person shares with others in a particular CLTV group. These factors can be anything from income and gender to ethnicity and type of home — any data point is fair game. This knowledge can help guide a brand’s engagement marketing strategy to influence customer behaviors in ways that entice them to spend more time and money with the brand. Conversely, those models can also help determine who is unlikely to increase time and/or spend with a brand and guide marketing efforts toward other customers. 5 © 2016 Ansira. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change.
What Modern Loyalty Really Means
Ansira: The Data-Driven Results Marketing Agency Ansira continually engages customers along the entire consumer life cycle and purchase funnel, using conversion optimization to drive higher sales at a lower cost. Our customer-centric approach applies data and analytics to every interaction, helping clients maximize customer profitability and optimize customer experiences. Designed to adapt with our clients’ ever-changing consumer base, we take the guesswork out of marketing. Our repeatable programs integrate all channels and media to steer consumers along the path to purchase – pre and post– leading to predictive ROI modeling. While traditional conversion optimization measures only one phase of the conversion process, we measure each and every consumer touchpoint to determine the best way to maximize marketing spend. Every single program is viewed as an opportunity to test, learn and optimize. Using multivariate and A/B testing, Ansira continually scrutinizes a variety of factors, including landing page effectiveness, messaging and targeting methodologies. We take full advantage of the latest in technology, message delivery and measurement.
Contact Ansira at www.ansira.com
6 © 2016 Ansira. All rights reserved. Unauthorized reproduction is strictly prohibited. Information is based on best available resources. Opinions reflect judgment at the time and are subject to change.
