5 Common Problems With Loyalty Marketing Programs

May 5, 2015

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Loyalty programs when performed properly can drive a large influence when customers are making major buying decisions and also provide centralized data on customers’ shopping habits.

Many companies are intimidated by loyalty programs as they can sometimes be cost prohibitive, and overly complex to manage internally.

Given these roadblocks, many deem it too difficult to justify the costs without being able to quantify the returns. Lot of companies think that their products’ superiority alone while drive customer “loyalty” and repeat business.

Given recent advances in digital marketing methods, there are now new marketing solutions that are not as costly as in the past when marketers had to rely on constant mailers and deep discounting.

New digital marketing methods have shown that a value-added and differentiated experience will ultimately drive customer satisfaction, leading to repeat business and long term client relationships.

Below we’ve addressed 5 common issues marketers run into, and we’ve provided tips and solutions we’ve found to help in the end marketing solutions.

Lack of Cross-Channel Customer ID

Marketing Problem #1: No Cross-Channel Customer ID

Many times brands have a very difficult understanding customers’ shopping habits, and in particular buying patterns, across channels.

Without the proper digital marketing infrastructure in place, it can be hard to match an online purchase with a call center purchase. Often marketers can’t even tie extensive online research and conversion in another channel.

Our Tip: Take the time at the beginning of your project to assign a Customer ID during the planning phase. While it may not provide immediate acquisition results, the cost savings and incremental conversions down the road will pay dividends as you move forward.

Consider including key identity elements of your site-based cookie strategies in your site login process. From the beginning, try to aggregate all data from each touch point, ensuring the identity of each user.

Marketing Department Bandwidth

Marketing Problem #2: Limited Marketing Department Bandwidth

Very often many marketers don’t have the team depth to start on new marketing initiatives while executing plans that are already underway. We recommend starting small.

Our Tip: At least once a month, take dedicated time with your team to discuss and plan marketing initiatives for later implementation. Discus your key segments, what are their key objectives, and how can your marketing plan help your customer achieve their goals. Also, you don’t need to be 100% prepared before taking the first customer analysis steps.

Low- or Variable- Margin Business

Marketing Problem #3: Low- or Variable- Margin Business

Many discounting models are based on everyone on your list receiving a discount, with some sort of assumption of % of customers that will redeem. This can be stressful as it can be very difficult to balance top line growth, margins, and overall audience.

Our Tip: Focus your best offers on the fewest most qualified customers by relying on your quality customer data.

Test offers for users showing strong buying behaviors and use a good discount to convert a highly qualified user who you can potentially win long-term repeat business.

Consider using sending time-constrained offers and single-use promotional codes to specific users that you think are strong candidates for long term conversion.

A good way to use test offers is by “narrowcasting” where you send out an aggressive coupon to your best customers with a limited time window and when you hit a threshold where a certain number have been redeemed, you could pull the offer back.

This gives you the ability to provide your best customers with some amazing offers while helping avoid situations where you give away more margin than you’re comfortable with. Another possibility if you want to avoid discounting is to offer a VIP service level.

Often the best customers can be motivated by early access to sales, double points, or personal shoppers.

Lack of Executive Support

Marketing Problem #4: Lack of Executive Support

Many times marketing managers’ goals and those of senior mgmt. aren’t directly aligned. Very often the issue relates to staffing and overall bandwidth, similar to Marketing Problem #2.

Every person in your database who hasn’t interacted with you in the last six to 12 months is much more likely to represent a risk to the overall health of your marketing programs by messing up your deliverability scores.

Our Tip: If you can demonstrate money saved, revenue grown or customer satisfaction elevated, you’ll have a much better chance of changing the conversation around topics like hiring and list growth.

Think about your business in its entirety, not just the marketing of it. If you can understand your mgmt. audience well and their goals, you can then initiate conversations around offer strategies.

Difficulties in Quantifying Returns

Marketing Problem #5: Difficulties in Quantifying Returns

One of the best parts of a strong loyalty program is its ability to measure ROI and impact to the bottom line. However, many times companies don’t have cost metrics to analyze events as simple as support phone calls or sales visits.

Our Tip: Recruiting from other parts of the business, including the finance department, to build cost models.

If you can quantify the top 5-10 customer touch points, almost any company can run a decent sized loyalty program based on the magic combination of reduced customer support calls and increased spending of your top 5%-10% of customers.

Don’t overanalyze, if you can manage to get the big number right, you can then calculate how much you have to spend on your top customers to drive new revenues.

To Wrap It Up…

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