Forget Green Stamps: The New Loyalty Marketing

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greenstamps_smallADOTAS – If you were born anytime before the 1970s you probably remember green stamps, the original loyalty marketing program.

It was designed to engage consumers to collect stamps and save for years to ultimately redeem them for something special and valuable, like a toaster or a sewing machine. There was even a “Brady Bunch” episode dedicated to this family event! Well, times have changed dramatically.

Today’s loyalty marketing programs combine sophisticated CRM technologies with highly-targeted digital promotions for each individual shopper — designed to actively motivate consumer activity in real time.

New loyalty platforms work in the now by giving customers incremental incentives (discounts, coupons, special offers, inside information) on a continual basis, encouraging them to make regular purchases — instead of requiring customers to collect points in hopes of collecting an incentive in the future. These platforms also help get consumers more deeply engaged with a product or brand, and can even drive them to influence purchases across their larger social network.

Loyalty marketing is a $4 billion industry, dominated by airlines, banks, retail chains, and hotel groups that mostly rely on card-based loyalty programs. However, these card-based loyalty programs are a lot like green stamps, in that customers have to: collect now, redeem later.

This model is broken, because consumers don’t shop the way they did in years past. They are much more price-sensitive and less brand-loyal; are increasingly impacted by social shopping and word-of-mouth; and are disillusioned with old-school reward programs that promised much but delivered little (think blackout dates, unusable points and byzantine redemption policies).

As a brand marketer, it’s now or never to win the customer loyalty game. That means taking a hard look at your current legacy loyalty programs that are failing to boost consumer allegiance or grow revenues in a cost-effective way, and embracing an entire new model of loyalty marketing.

Incremental Rewards = More Purchases

So what do these new loyalty platforms look like? The most important difference in today’s loyalty programs is that they are aimed at motivating the entire customer base up the “Loyalty Curve.” This means using regular rewards to actually change each customer’s behavior over time.

You do this by analyzing CRM data to better understand what motivates each individual shopper, and then based on your findings, present each customer with individually-targeted digital awards delivered continually throughout the shopping lifecycle.

In other words, the old way was to reward only your top 5%-10% of customers with special promotions and discounts. While these true fans are worth their weight in gold and should be rewarded as such, today’s loyalty programs don’t only cement the loyalty of an elite few. The goal is to make every customer more loyal.

This level of individual loyalty marketing is possible today because of sophisticated customer data analysis technologies, as well as email, mobile, and social media platforms that allow marketers to extend relevant offers to all repeat customers, whether they return once or a hundred times.

How to Implement the New Loyalty Marketing

As a marketer accustomed to the old way of doing loyalty marketing, the newest forms of Loyalty Curve marketing can seem daunting. After all, it sounds labor-intensive to extend targeted incentives to individuals instead of providing blanket point programs to large groups, and to manage the regular delivery of incentives to individuals over time.

But it isn’t that difficult — here are a few steps to get you started with Loyalty Curve marketing.
• Attract new fans and followers to your brand through traditional marketing methods and social media.

• Leverage powerful CRM and analytics tools to identify and classify your customers: the 50% of your customers who aren’t yet fans; your large “fan” base of recurring customers; the 5%-10% of your customers who are “loyalists”; and the even smaller percentage who promote your brand to their social networks as “advocates.”

• Extend immediate and recurring incentives to your entire fan base via social media, email, and the web — and reserve highly-exclusive offers for your loyalists and advocates.

• Motivate and reward your customers to move from fan, to loyalist, to advocate through both financial and emotional incentives.

• Monitor and measure the ROI of your loyalty program down to every purchase and optimize it based on your findings.

For example, a video game manufacturer might let loyalists get preview copies of a game, and allow advocates to be part of testing team. The brand’s large fan base might get access to free downloadable game cash. The key is to provide relevant, immediate and recurring incentives all throughout the customer lifecycle, instead of requiring customers to save up points for redemption at a later date.

Through the use of viral marketing methods on social networks, marketers can also extend their loyalty programs by encouraging fans, loyalists, and advocates to spread the word about their favorite products.

A loyal customer today means someone who has an ongoing relationship with your brand across online, social media, mobile, and in-store channels. By providing customers with regular incentives over time, you will not only encourage individuals to move farther up the loyalty curve with time, but will gain invaluable insight into your customers’ preferences, tastes, and opinions.

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