Customer Loyalty Resolutions for 2008

A lot has happened in 2007 and there are clear implications for marketers concerned about customer loyalty in 2008, especially with a recession looming (or here already, depending on whom your favorite economist is). 

So in the interest of making customers happier and companies more profitable, here are our top customer loyalty marketing-related resolutions for the year.  Over the next few months we hope you'll further the dialogue on these issues and others presented here.

In terms of context for 2008, there are lots of ingredients stirring the pot but there are two that are most important here - the economy and elections.  These two combine to stress out both consumers and corporations, especially in terms of their ability to receive communications.  At the minimum they add to the already increasing clutter in their minds, hearts, in-boxes, and yes, on their Facebook pages.

As with any stress or anxiety, there is only one solution:  work it out.  This means being disciplined, understanding the situation and taking action. 

There is an article in last Saturday's New York Times that is well worth reading about Amazon, now a $15 billion retailer!  To put that in perspective, that is more than 50% larger than Nordstrom, another Seattle legend in customer centricity.

In the article, Joe Nocera anecdotally relates a holiday shopping experience that he has been talking up since the holidays.  Further, it made him look at Amazon's stock price and discover that their financial performance has been stellar.  Investors are realizing the benefits of Jeff Bezos' strategy that being obsessed with customers translates into growth and profits.  Given that Bezos owns more AMZN stock than anyone, he has his, and every other shareholders' interest at heart (and wallet).

Their numbers are simply awesome:  72 million active customers who spent an average of $184 last year versus $150 the year before.  That is how you grow your business by 35%:  increase your existing customers' business by over 20%.  Simple, though easier said than done, especially for public companies.

The Amazon story is a great setup for our resolutions.

Resolution #1:  Have a strategy and be disciplined in following it.

It seems that with increasing frequency, more and more companies are pursuing tactics in search of a strategy; or, as a former boss characterized it, a "dog's breakfast" of a marketing plan.  Of course our bias is towards strategy first, and preferably customer strategy at that. 

Bezos committed to a business strategy years ago that put the customers at the center of their operation and, while it's taken some time, their performance speaks for itself.  By his own admission, Amazon is "not a great advertiser".

Lucky for them.  As it's an election year, we like to think of Amazon's strategy as "It's the Customer, Stupid."

Resolution #2:  Connect All the Dots

We see three key elements to any customer marketing plan as more important than ever when times are tough.  With deference to both Dr. Seuss and Jesse Jackson, they are:

1. Integration
2. Calibration
3. Iteration

Integration means aligning as many activities as possible, certainly marketing but also operations and measurement, so that the customer is the focus.  It means not making decisions in a vacuum and likewise, executing a consistent strategy across all areas of a business.

This is another area where Amazon excels, as evidenced by the financial challenge of giving free shipping for orders over $25, but the payoff coming from the customers increasing their average purchase to take advantage of the offer.

Calibration means measuring things so that you can support decisions like free shipping.  Calibration also means testing things before rolling them out so that you can maximize the probability of success.  Clearly Bezos was comfortable rolling out free shipping, and newer services like Prime, because their impacts were measured used to support the decisions.

Last, iteration is important because there isn't usually a straight line.   Things change, both internally and externally.  Customers don't always act the way we think they will, competitors react in a like manner, and sometimes ideas are just wrong or poorly executed.  Flexibility is one of the most underrated strategies in business and one of the most powerful.

Resolution #3:  Remember the Brand

We often cite a mantra that goes "Customers have relationships with brands, not with marketing programs."  It's contradictory for so many focused on loyalty marketing, especially those with pure direct marketing backgrounds.

Especially with companies still spending heavily on brand awareness building activities (i.e., advertising), when desperation presents itself people promote and often in an irresponsible, or at least aggressive way.

There is certainly a time and a place for promotion, but it should be done in character of one's brand.  And loyalty initiatives, connecting brand support and promotion, are no exception.

Ultimately, loyalty is about trust, and this is where Amazon's activities are ultimately brand-relevant.

Resolution #4:  Stop Mass Marketing via Email

Send less email but make it more relevant to both your business and your customers.

Content, storytelling and experience is important.  Quantity is absolutely not quality, especially when people are increasingly connected and opt-in and open rates for email continue their decline.

Further, understand and treat different segments of customers (and especially non-customers) differently.

It was pathetic to see the volume of mass emails "spewing" as the economy softened in Q4 last year and especially Holiday.  Marketers just blasted and blasted away at customers, opting for frequency over relevance.  Based on the results being released, it didn't work.

Open rates and levels of engagement will continue to decline in lieu of irrelevant dialogue and marketers desperately trying to realize sales by increasing the frequency (and telegraphing their desperation) of their email.

Resolution #5:  More Experience, Less Rewards

Loyalty marketing is still too closely connected to Rewards programs.  We are increasingly biased away from Rewards, especially when those "rewards" are things.  People have lots of things and those things have increasingly less meaning and, especially in most loyalty programs, declining in value.

Connecting the experience to any kind of loyalty proposition is increasingly the winning strategy, both for products and services.  And experiences that are brand-centric are not easily matched by competitors yet, done right, can create emotional bonds that transcend the idea of transactional loyalty.

Here's to all the best for you and your business in 2008.

tags: loyalty marketing  relationship marketing  email marketing  amazoncom  joe nocera new york times  customer marketing strategy  loyalty marketing strategy  email marketing strategy  enterprise value  

links: digg this    del.icio.us    technorati    reddit