Individualization Is the Future Of Loyalty And Engagement

By | Thursday August 6th, 2015

individualized loyalty-engage“If you don’t like change, you’re going to like irrelevance even less.” – General Eric Shinseki, U.S. Army, Ret., Former Secretary Veterans Affairs

Customers are evolving, as is the technology they rely on. That means marketers have to adjust their sails and navigate the winds of change – now. These changes provide you with opportunities to transform your business for the better, provided you embrace them. As General Shinseki alluded to in his quote above, you become rigid at your own peril.

What’s at the heart of all this change? Technology. The ever-increasing velocity of digital technology has accelerated what Forrester calls “The Age of the Customer.” We all know how easy it is to pull out a smartphone or tablet to find out virtually anything – and that’s exactly what today’s consumer does. They can research and buy whatever they need – whether a product, service or experience – with just a click, wielding tremendous, instantaneous control.

Of course, for marketers, this customer-driven dynamic can be maddening! Speed and control have transformed buying behaviors, and now your customers expect to access whatever they want, whenever they want it, wherever they are… instantly. When they can’t find exactly what they want, they move on, with just a click.

That leaves little room for error, and no room for irrelevance.

In addition, digital technology has created a cacophony of marketing noise and color, an onslaught of marketing madness competing to be noticed. As a result, details often get missed, and many marketers settle for “close enough.” But “close enough” is going to become less and less effective, especially if it means profiling audiences instead of using data driven marketing to build relationships with individuals.

Think of it this way: Now that your customers are flooded by marketing, it’s like living in Times Square 24/7. As anyone who’s been to Times Square knows, it’s impossible to have a meaningful conversation in that environment, and the intense availability of options makes it easy to try something new – particularly if the cost to switch is practically non-existent. Without relevance, relationships are short, attention wanders and marketing campaigns fall flat.

But in spite of all that, in spite of the noise in the market, there is a silver lining: COLLOQUY has seen loyalty program memberships more than triple over the past 15 years. That’s because customers are willing to create relationships with brands – if those relationships deliver value. And that value can flow both ways. Rich marketing insights come from a relationships where customers receive true value for the information they share – and that, in turn, empowers brands to improve profitability and increase engagement with their highest-value customers.

In fact, small shifts in loyal customer behavior have been shown to have significant business impacts. Bain & Company found that increasing customer retention by 5% increases profits by 25-95%. That’s why loyalty remains a powerful strategy for companies seeking a deeper understanding of their best customers and improved ability to retain, grow and acquire more high-value customers.

So if loyal customer behavior offers such tremendous advantages why are so many companies struggling with their loyalty programs? According to COLLOQUY, it’s because even though overall membership shows growth, loyalty program engagement has decelerated. For example, while the average U.S. household holds memberships in 29 loyalty programs, that same household is only active in 12.

Clearly, consumers establish relationships with brands hoping to get something of value. But when that value exchange doesn’t meet their needs, they split their share of wallet elsewhere. Because let’s face it – your customers aren’t interested in your org charts and your system integrations. When individual understanding is left out of their experience, customers feel betrayed. Their loyalty to your brand is ignored. And all too often, they move on.

For decades, brands have built a wall between their loyalty and engagement initiatives and the entirety of their customer experience, and that’s what’s driving the decelerating engagement. COLLOQUY advises marketers to leverage loyalty learnings across the organization and ramp up integration of all channels to improve relevance and increase engagement with members.

Are your processes up to the task? Rosetta Consulting’s 2014 Customer Engagement Survey finds that customers switch platforms up to 27 times an hour, and they demand relevance and coherence in every interaction with your brand. Yet, Forrester found that only 34% of loyalty marketers feel their internal systems such as their loyalty and campaign management solutions are integrated enough to leverage the insights they need to connect with customers.

Forrester says “marketers need to step up their technology execution and analytical prowess to act on the useful customer insights they create.” Without doing so, marketers neglect to recognize their most valued customers wherever and whenever they engage with the brand.

As Fara Howard, global VP of Marketing for Vans, said at the 2015 Gartner Digital Marketing Conference, when marketers fail to use the insights they’ve gained, the customer is left in the cold, saying, “I love you, and you don’t even know my name.”

Now, organizations are racing to connect digital touchpoints in a loosely woven fabric of point solutions, and they’re attempting to collect – although not always integrate –information through every channel. But that often leaves loyalty and engagement siloed off to the side. Steve Dennis of Sageberry Consulting described it this way: “The battle between what your customer wants, needs and expects, and that which your various silo chieftains and defenders of the status quo try to hold onto, is intensifying.”

For Emily Collins of Forrester, the relationships you have with your customers and the loyalty they demonstrate to your company trump traditional competitive advantages. Loyalty is mission critical, she says.

Next week, I’ll discuss what I see as the five keys to individualized loyalty. After that, I’ll be exploring how three popular brands – Disney, Starbucks and Apple – are innovating and excelling with the next generation of loyalty and customer engagement: individualization.

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Jenne Barbour

Jenne Barbour who leads marketing strategy for Teradata Marketing Applications. One of Direct Marketing News’ 40 Under 40 for 2014, she drives evangelism of individualized insights. Her background is in data-driven marketing, customer engagement, loyalty marketing, CRM, and social marketing, with focuses on retail, complex system integrations, and making customer relationships more profitable. Jenne has helped Hertz, 7-Eleven, JCPenney, and American Eagle Outfitters drive customer loyalty.