The 5 stages of a healthy loyalty program

With Valentine’s Day looming, I shared with a friend a tongue-in-cheek Valentine’s Day comparison of dating to loyalty program success. Without missing a beat she remarked, “Wow, are loyalty programs really that bad?” Well yes, just like in dating you have to kiss a lot of frogs to find the right connection. According to COLLOQUY, the average household has 22 loyalty memberships, but only 8 are active, which correlates slightly to our national divorce rate of 50 percent. The comparison of loyalty to the travails of dating is not a new idea to loyalty insiders. Love and loyalty are based on treatment and trust. Much the same way dating and marketing is experienced. Think of a bad relationship: they don’t listen, they are pushy, communicate badly and only talk about themselves. However, for those customers who perceive loyalty as an invasive and complicated experience if you follow some guidelines we will show you loyalty programs can be a beautiful thing…

Marketers, you aren't the only fish in the sea, customers have many choices. Omnichannel engagement is buzzing with interaction. Consumers are interacting with brands in real time through many channels at all hours of the day, and there is always someone richer, better looking and with a stronger personality waiting to poach your best customer. Your customers require appreciation and adoration just as they would in a relationship. How can you make sure you keep them engaged for a long-lasting relationship?

With that in mind, here are a few basic stages in the lifecycle of a healthy customer relationship. Loyalty lifecycle

Identify: We all have specific requirements in finding the right partner, and these characteristics are subconsciously understood. With a loyalty program, you should assess your best customers (e.g., the 80/20 Pareto rule) and create a model to identify their characteristics. You can then use this to better target the type of members you want to attract in the future.

Acquire: Once the subject has been identified, the acquisition stage begins. A look across the restaurant or a meaningful exchange at a party is akin to targeting your customer when they are online and delivering a relevant message that makes them feel special in a loyalty program. It can make for an awkward conversation if you talk about something that is totally out of left field (or continuously talking about yourself), so be sure to have your relevant exchange designed first. And stalking is not cool. You want to engage just enough to keep your loyalty members looking forward to hearing from you.

Inspire: When we meet someone new we present ourselves in a positive and attractive light. But often wonder what will the future be? With loyalty, this is the opportunity to present the brand in a relevant manner, communicate the program’s simplicity and present the rewards as attainable. You want your brand to be easy to engage and communicate with, while showing your customers the benefits of a long-lasting relationship.

Engage & Reward: What kind of date do you plan? Do you typically plan around your likes and interests, or do you strive to do something that would be fun and exciting? In loyalty, you must invest in treating your members in a remarkable way. Use data that has been accumulated to offer engagement opportunities that resonate with your program members. Leverage your tiered loyalty member data, perform appends, target your customers who are most engaged with your brand and reward them for their interest. For example, Hilton does an excellent job in engaging its customers both with its digital communications across email and social and in hotel experience.

Retain, Win-back or Purge: This is the last call of a relationship. Do you like them enough to engage further, or did you realize that it just no longer worth your time and money? Or did you dump them for the wrong reason only to realize they are worth keeping? In a loyalty program, it is critical to decide who to spend your marketing budget on and when to cut your losses. Knowing the profile of who you retain or dump is an important component of your program. You might also consider a win-back program to easily re-target those that might actually be worth keeping.

Lasting relationships are successful because you try to constantly improve your understanding and needs of your loved one. In loyalty programs, we refer to this as “small data”—what have we learned that really matters? What moves the needle in this relationship? A healthy, loyal relationship works because you are enhancing the lives of your members. And I promise you, a healthy relationship will be worth the investment in the long run if you spend time and energy on those especially valuable to you.

Happy Valentine’s Day!