Wednesday, February 3, 2010

Improving Your Loyalty Program

"Deeper engagement and personalized contact drive loyalty, not mass blast communications and gimmicks," writes Marketing Charts about a new report from the Chief Marketing Officer Council

The classic loyalty marketing program is an airline's frequent flyer program. For service contractors a service or maintenance agreement program is a loyalty program, even though many do not think of them as such.

Marketers think loyalty programs make sense and make money for their companies, but that they're not doing a good job executing.  According to Marketing Charts:
According to the survey, most marketers (61%) believe that loyalty program participants are the best and most profitable customers with 65% of respondents viewing customer loyalty program investments as an essential, or quite valuable part of the marketing mix.
However, only 13% of respondents believe they have been highly effective in leveraging loyalty and brand preference among club members, and nearly 20% don’t even have a strategy for this. Another 25% admit they have not mobilized brand loyalists to become active advocacy agents.
Yikes.  Here are the problems (click to enlarge)...

A few key stats from the report are:

  • Loyalty programs do generate buzz with 50% of customers in loyalty marketing programs talking about the brand some of the time and 20% outright cheerleading.
  • One out of two (54%) customers will drop out of the loyalty program following a bad service experience.  It's surprising it's not higher and indicates a degree of forgiveness among loyalty participants.  Still, the company must deliver or lose, regardless of a loyalty program.
  • Even though customers complain about spam, nearly two out of three (64%) want electronic communication.  The good news is you can reduce costs with customers who want electronic communication.  The bad news is you can't use electronic communication across the board.  A mix is required and it's necessary to ask customers what's preferred (and it may be both).
Service agreement programs are strong loyalty marketing programs. They can be enhanced by the inclusion or a "rewards" element, such as the Service Roundtable's "Comfort Cash" program.

Click here to read the full article from Marketing Charts. Click here to learn more about the Service Roundtable.


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