I discovered the joy of On-Demand TV this week. Okay, I know I’m probably years behind most people in that regard, but until just recently, the option was never available to me. I honestly didn’t think I’d ever use it but on a boring Sunday night when “absolutely nothing” was on my 75 channels, I decided to give it a whirl. I instantly loved it! There they were – all those missed episodes of Covert Affairs (USA Network spy show – pretty good, I recommend it!) were at my disposal. I was in control. I could watch them whenever I wanted not just when they appeared on the TV schedule. I have to say, I am totally loving my new-found power.
Not your father’s Oldsmobile
On-Demand TV is just one of many examples of customer migration to the driver’s seat. The explosion of social media has given customers an outlet for sharing their experiences with your company and its products (which, like it or not, assumes some of the control over your brand image); shopping comparison sites such as NexTag and PriceGrabber enable shoppers to compare your prices with your competitors before they even walk through your door, and web customization tools allow customers to choose what news they want and how they receive it. The list goes on and on – suffice it say, the bus has a new driver, and it’s not you.
I don’t mean to say that like it’s a bad thing. It’s certainly not. Customers having more control means that marketers need to work differently – not necessarily harder – just differently. It means that the product-centric approaches will have to give way to customer-centric ones. That applies to loyalty programs as well. The name, “customer loyalty program”, tends to imply that the customer is the central point. That’s not necessarily the case. I venture to guess that many loyalty programs out there are not customer-centric but rather crowd-centric – utilizing the old one-size-fits-all approach. They were probably designed ions ago when customers wielded a bit less power and had access to far less information. But those times have changed, my friend. Programs that haven’t kept up with the changing times are programs that are growing in expense while declining in results. It’s time to focus on your program and bring it up to speed. It’s time to optimize.
Loyalty Optimization Quiz
The first step to optimizing your loyalty program is to understand how it’s performing for you today. Where it is working well; where it is not working well; and where have you missed the boat entirely. How do your customers feel about it? They may not always tell you with their voice, but you will definitely tell you through their behavior. So, look into their behavior. Understand how it compares to last year or the year before that.
Without this knowledge under your belt, you run the risk of tinkering with something that doesn’t need tinkering or allowing something to continue that shouldn’t continue.
Here’s a brief quiz to determine how your loyalty program is working for you. A=1 point; B=2 points; and C=3 points.
- Does your loyalty program drive customer behavior that will help you achieve your current business needs and support your growth plans?
- Not sure of what our specific needs and areas of growth are these days
- Maybe but unlikely since our needs change regularly and our growth plans have evolved since we built the program
- Yes, our loyalty program gets refreshed periodically so we can make sure our program is aligned with both our immediate needs and our bigger picture growth
- Do you know the type of customers your program is attracting? Specifically, are they of high value or high potential value you?
- Not sure, don’t have any benchmarks or value calculations in place
- Maybe, but unlikely since it seems like everyone is in it for the discounts
- Yes, we have profiles and value/potential value algorithms in place so we can tell exactly the type of customers who are enrolling in our program
- Does your program drive incremental customer behavior rather than reward existing behavior?
- Not sure, haven’t checked it lately
- Maybe but unlikely since we haven’t really defined what incremental behavior is
- Yes, our benefits structure has been set up to be largely funded by incremental behavior
- Do you incorporate customer preferences in your promotional content and channel delivery?
- Not sure that we even capture our customers’ communication preferences and we only use transaction behavior at a cursory level
- Maybe but unlikely since we pretty much send everyone the same promotional message
- Yes, we leverage preferences and transaction information to target our promotional messages to ensure they are relevant to each customer. We have found that this has significantly improved our response rates and program ROI.
- Do you periodically solicit customer feedback?
- Not sure that we’ve ever had a customer survey or focus group.
- No, we don’t do it on a regular basis
- Yes, we survey our customers and conduct periodic focus groups. We also listen to what they’re saying and are prepared to make changes based on feedback.
Okay, now total your points. How does your score rate?
| Your Point Total | How Your Rank |
| 5-9 points: | Your program is trouble and requires immediate attention |
| 10-14 points: | Some of the pieces are in place, but optimization is recommended |
| 15 points: | Congratulations, you have a solid program! Keep it up |
| 16+ points: | You can’t do math. |
Not overly thrilled with your results. That’s okay, our next post will focus on the “do’s” of optimizing your program.
Tags: customer migration, loyalty optimization, loyalty program, loyalty strategy, optimization, rewards program