The Loyalty Leap – Turning Customer Information into Customer Intimacy

Earlier this month, the Mumbai session of RAI was hosted by Bryan A. Pearson, President and Chief Executive Officer LoyaltyOne Inc. The session was centered on Loyalty lessons from Bryan’s best-selling book, the Loyalty Leap. Through his book, Bryan leveraged and shared two decades of frontline experience with loyalty programs to give Indian marketers sound strategies for navigating the world of loyalty, privacy and data integrity. The key highlights of his presentation are below.

Retail-Learning

Trends
Loyalty is a measure of how customers interact with brands all over the world. Marketers want to learn about their customers to improve services and finally have a positive impact on the revenue. The scope for loyalty is immense in India given the current penetration of loyalty programs–limited to SEC A/B with just 0.4 to 0.6 cards per person, compared to that of an average American who is much more engaged with 16 to 18 memberships. Customers like loyalty programs when they are run with the customer in mind and lack of rewards, recognition and relevance will result in a not so successful program. One of the most successful coalition loyalty programs in the world is the Airmiles Rewards Program and the number that proves its success is the marginal number of opt-outs (just 10,000) in the 20 years that the programs has been operating for.

The rise and fall of the CFO
The focus on efficiency and cost cutting has yielded strong results for companies. But the problem is that cost based management can take a company only that far, and companies are beginning to recognize the limitations of the CFO mind-set. It is mathematically impossible for every organization to enjoy a cost advantage if its competitors are approaching the problem in the same way. Today’s reality is that most organizations, in order to achieve sustainable growth, must increasingly compete through customer intimacy.

Media fragmentation
Consumers are not immune to our efforts to get products in front of them, but they are only half listening. Arguably, there is no longer such thing as the average consumer. Despite the explosion of segmented media and data targeting, our customers face 5000 to 10,000 brand messages every day.  Only the relevant or the obnoxious break through. Consumers will pay greater attention to those messages that strike a resonant chord due to meaningful content, or due to a pre-existing relationship with the brand.

Consumer to the power of 10
Word of mouth has a new meaning in the age of internet and social media. The company to customer relationship has given way to customer to community members. And the community is not friends but just a group of like-minded individuals. In this context an interested brand is challenged to seek them out and talk to them in a relevant manner. Apart from seeking out homogenous groups on social media, today’s brands need to find their voices and operate at a higher standard. This is because while social media can be a powerful tool for creating positivity, it can as quickly become a destructive force.

The capability revolution
Organizations today have the ability to collect, manage and analyze huge volumes of data. Digitization of transactions and data collection allow high degrees of customized customer experiences. But having said that, with big data comes big responsibility. Organizations must commit to using the data to provide optimal value to customers on a sustained basis. One cannot assume that a once satisfied customer is a loyal customer.

Enterprise Loyalty
If traditional database marketing results in direct-to-consumer communications and changed behavior, then enterprise loyalty extends the application of data to those through processes within the organization that have customarily been operationally focused. Simply put, enterprise loyalty brings the application of data to areas of the company that rarely or never before used such information to guide their decisions.

The 3 Rs of Loyalty
Reward, recognition and relevance are the three pillars that make a loyalty program real and customer-centric. A reward simply is how the company acknowledges a customer’s loyalty. Recognition is how the company provides a unique value based on the customer’s level of engagement. Airline and hospitality programs bring this forth efficiently through tiering. Relevance is by far the most important aspect through which companies can customize a particular customer’s experience to ensure that it resonates directly with the customer’s needs and preferences. Collection of data is the first step in this process and allows companies to deliver value across the 3Rs.

Dimensions of Relevance
Relevance can further havespatial, temporal, cohort and individual considerations. Spatial is based on geography and physical presence. Temporal is based on the life stage that a customer is in.  Cohort is defined basis social, cultural and religious affiliations. And finally individual is a customer’s personal set of choices or interests that are generally not exhibited in public.

Making the Loyalty Leap
Finally in a nutshell the following steps will help an organization make the Loyalty Leap:

  •     Drive organizational commitment
  •     Understand your best customers
  •     Create value around the 3 Rs
  •     Break free from the data ghetto by moving to enterprise Loyalty
  •     Be transparent and reasonable with use of data

Bryan Pearson is President & CEO, LoyaltyOne, Inc. He was nominated to Smart Money’s Power 30 list, alongside Steve Jobs, Marissa Mayer, etc. He is the author of The Loyalty Leap: Turning Consumer Information into Customer Intimacy, a Wall Street Journal hardcover bestseller.

LoyaltyOne is a global leader on consumer insights & strategy, loyalty marketing and customer experience management.

 

 

 

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Retailers Association of India (RAI) is the unified voice of Indian retailers. RAI is a not for profit organization (registered under section 25 of Companies Act, 1956), works with all the stakeholders for creating the right environment for the growth of the modern retail industry in India. RAI is the body that encourages, develops, facilitates and supports retailers to become modern and adopt best practices that will delight customers. RAI has a three charter aim of Retail Development, Facilitation and Propagation.