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Who's Got The Best Loyalty Program?
This question is one that clients and prospects ask us regularly.
We recently attended the Freddie Awards in Ft. Lauderdale. The Freddies have been going on for 21 years now, thanks to Randy Petersen, aka the GFOFFP (with apologies to James Brown, RIP). It was great to see a lot of old friends and familiar faces, and it also kept this burning question above top of mind.
While we think about this question a lot, it's tough to answer, because we don't honestly believe there are a lot of great loyalty programs out there. There are some well designed programs and there are also some well executed programs. However, they are not always one and the same.
The Freddies reinforce these observations. The Best Program winners in their respective category were not the ones that also scored Best Award (overall), but rather the ones that won for Best Member Communications and Best Customer Service - dimensions focused on program execution not program design.. The categories related to program design (e.g., Best Award) went to hotels and airlines that did not win Best Program.
Loyalty program shortcomings, especially those in the travel space, are due in part to the fact that they are all basically constructed from the same model: Transact, accrue points, redeem for awards. Transact enough and you can accrue at a higher rate and get a bunch of nice, soft benefits. (And please, use our credit card, because that's the real measure of success because it brings in so much non-core revenue for us!)
Ok, enough of the cynicism.
The real value of loyalty programs lies in their ability to engage customers and enable relationship marketing. This is where executing marketing activities based on customer data creates marketing excellence, not simply program excellence. Loyalty program success is not just about fulfilling rewards, but about continually raising the bar in terms of meaningful (relevant) communications with customers.
The stakes here are being raised.
Customers are increasingly sophisticated in terms of their expectation of companies to properly (and intelligently) use customer data. In order for loyalty programs to engage members, customers are requiring that brands address their individual needs and make it easier to do business with them. Again, to illustrate, the real Freddie winners took home trophies for Best Member Communications, Best Website and Best Customer Service.
A great loyalty program is perhaps less about the program and more about how the program is used - internally and by the customer. Providing better service to customers and more relevant communications nets a win-win for everybody
For the 2010 Freddies, we hope that a much-needed new category at the will be added: one for the best use of social media.
Social media is requiring companies to manage far more than their brand advertising and direct customer communications like email and newsletters. Customers are in the social media space, talking about brands and sometimes even their loyalty programs. Consider the numbers: nearly 200 people million on Facebook, soon to be (according to TechCrunch) 50 million on Twitter. The mandate to add social media participation to other behavioral customer data is beyond compelling.
Unfortunately, this year there was no mention of social media participation from the airlines, hotels and other travel-related companies at the Freddies.
Of course, the travel companies are not alone. Many, if not most, loyalty marketers are not keeping up with these opportunities. Bill Hanifin made this point clear in a recent post worth reading. Of course, it's not just social media, this includes traditional channels like email and postal mail that so many marketers, even those with loyalty programs (i.e., those that have the data!).
Those brands and loyalty marketers ready to innovate and change are the ones who will be the clear winners. For some the innovation will be about fundamentals like relationship marketing. The leaders, however, are and will be focused on the cutting edge of communication - to include social media and whatever new modes of information exchange evolve in the future to increase brand relevancy and customer engagement.
