It’s Monday morning and the membership status report on your company’s Loyalty Programme reveals flat enrolment and escalating attrition for the fourth month in a row. You reach for the antacids, but it’s really time for Programme therapy, including electric shock.
The objective of any loyalty scheme is to establish long-term relationships with customers so they count on the programme as they would a trusted friend. If that friend – or programme – starts interacting with them superficially or ignoring them altogether, they will probably disengage, if not leave outright, without ever revealing that something is wrong.
You have to catch your customers before they reach this point, because once they are disenchanted, you will probably need a big infusion of creativity and cash to win them back. That is why it pays to look for signs that your loyalty programme is in a rut before the customer notices.
MJA Associates have identified three important trouble markers along with steps you can take now to turn your programme around.
Member participation rates are declining. A thriving loyalty scheme has steadily increasing participation rates. Although rates vary widely depending on the level of customer involvement, the size and scope of the programme and the marketing strategy of the organisation, a few ground rules apply.
New programmes should grow steadily over the first two years. A mature programme should generate enquiries at a monthly rate of 4%-5%.
The most common cause for declining participation rates is loss of creative focus on the scheme. Too often, the loyalty programme gets major support and attention from the sponsor only through the launch year, the assumption being that a successful launch signals the end of the really hard work.
Nothing could be further from the truth. The day that you decide that your scheme can be relegated to second priority is the day you plant the seeds of disenchantment in the minds of your members.
It is also common for newly launched programmes to settle in a rut of self-imposed sameness. Members repeatedly receive the same kinds of offers. Member communications repeat themselves in form and substance. Benefits begin to lose their lustre as their delivery becomes inconsistent or insincere. The relationship’s special character is belied by the homogeneous nature of all member interactions with the programme.
There is no excuse for this, and it’s easy to fix. Simply set as your goal the creation of some kind of surprise value-added offer for at least one segment of your membership base each quarter. By surprise, MJA Associates mean something different in style and substance from anything you have already done.
Of course this kind of commitment to testing new and different tactics on a continuous basis means that you will be pushing yourself harder. But that is the price of the game, and the impact is both cumulative and positive. Customers like pleasant surprises and they tend to talk about them, which generates more new members and increasing activity rates.
Return on investment has diminished. When ROI begins to slip in a loyalty programme, management’s first reaction is often cost reduction (let’s cut the value of the points!). But that is like opening a vein. Reducing programme funding may improve short-term ROI, but it only weakens your ability to recover and thrive.
The better approach to declining ROI is to tackle your benefits structure with fresh eyes and open ears. Talk to members. Ask them what they like and dislike about the scheme and what kinds of recognition and reward they wish for. Look for new benefits or variations of existing benefits that might be offered to stimulate incremental purchase behaviour.
Test carefully. The appropriate approach is with a scalpel, not a butcher’s knife.
ROI can be affected dramatically if you focus on member segments where share of customer is already moderately strong. These customers are already willing to select you over your competition. By giving them evidence of added value, you might see large gains – without having to deliver the same new benefit to the entire membership.
The Loyalty Programme’s been orphaned. Whether through attrition, reorganisation, mergers or downsizing, chances are that both the original ‘parent’ and objectives of your company’s loyalty scheme are no longer around. An alternative scenario is that the whole marketing department oversees the loyalty programme, rather than one individual person being directly responsible.
Loyalty Programmes need a corporate champion and a day-to day leader. The business stays focussed on the customers’ wants and needs and that the programme is positioned as one of the key direct contact points that the company has with the customer. The leader ensures that the scheme is directly linked with corporate and product marketing strategies and that the consequences of other marketing decisions take the loyalty programme into consideration.
The day-to-day leader of a loyalty programme needs special skills in order to manage it effectively. He or she must recognise the potential for the programme to build a dialogue with the best customers. He must be well respected within the organisation and recognised as someone who is close to the customer. And he must understand the many facets of making a scheme successful, such as linking programme to strategy, effective communications and ensuring that operating systems deliver information quickly.
One more attribute to look for in finding your programme champion: courage. Select someone who has the dedication and courage to fight for the customer.
It is all too easy to allow the loyalty scheme to settle into the broader portfolio of marketing projects, which are buffeted by the stress and strains of organisational budgets and politics. Unlike your advertising and sales promotion efforts, your loyalty programme constitutes a genuine, tangible connection to your most valuable customers. Your champion must be willing to march straight into the CEO’s office, if necessary to defend the integrity of that connection.
When all is said and done only a steadfast, courageous commitment to continuous innovation and creativity in the pursuit of delighting high value customers will keep your loyalty programme out of the ruts that can sidetrack and deplete them.
