Shakespeare famously claimed that names are unimportant, that “a rose by any other name would smell as sweet.” Clearly, he wasn’t in marketing. The marketing world has long recognized the power of names. However, a new study from the CMO (Chief Marketing Officer) Council shows that the majority of marketers fail to use customized communication in their loyalty programs. Meanwhile, consumers in such loyal customer clubs are clamoring for more tailored interactions. Just what’s in a name? And can personalization increase engagement? In addition to tackling these questions, this article will review the CMO Council’s loyalty study and propose research techniques for increasing ROI on loyalty programs.
Published in January of this year, the CMO Council’s report is titled “The Leaders in Loyalty: Feeling the Love from the Loyalty Club.” The CMO Council surveyed 600 marketers and 700 consumers in loyalty clubs. This pool of respondents allowed CMO to discover the success of loyalty programs from both consumers’ and the marketer’s perspectives. Their conclusion? “Both consumers and marketers agree: deeper engagement and personalized contact drives loyalty, not gimmicks.”
Furthermore, the survey shows that while the majority (65%) of marketers find loyalty programs essential to their practice, only 13% say their loyalty programs are highly effective at “leveraging loyalty and brand preference among club members.” In other words, although companies spend roughly $2 billion per year on loyalty programs, they are not seeing ideal ROI for their efforts.
However, the report’s data points marketers in a definitive direction for improving ROI, namely customization. 23% of consumers surveyed complained about the lack of personal communication in loyalty club communications. As Sandra Zoratti, VP of Global Solutions for Marketing for study partner InfoPrint Solutions Company, puts it, “Customers are issuing a very clear warning to marketers: give [us] relevant communications that reflect my history and connections to you, or we will go elsewhere with our business.”
Marketers are taking this advice to heart. According to the CMO report, 51% of surveyed marketers reported that they plan to increase loyalty programs’ ROI by personalizing communication and target messages. Along the same lines, CMO Council Executive Director Donovan Neale said, “Better understanding of customer behaviors, predispositions, intentions, and preferences enables more effective and relevant messaging. It is also an essential part of customer revenue optimization and lifetime value building.”
The question, then, is not whether but how to capture customers’ inclinations. 73% of interviewed marketers reported gathering basic demographic information for their club members, but only 31% track customers’ personal preferences. It seems the marketing world’s market research techniques have not yet caught up with modern technology. We now have the database capacity to store gobs of customer data (just ask Facebook), and consumers are often willing to share their preference information (and more; just ask Facebook users). The difficulty lies in actually capturing customers’ thoughts.
PeopleMetrics’ approach allows customers to provide immediate input. We help our clients interview their customers either at the POS, or shortly thereafter. Such surveys are usually short (five minutes or less), and many customers actually appreciate the opportunity to provide feedback. After capturing such vital customer information, many companies remove the individual from the picture by rolling all data into the aggregate. Although this allows them to track “big picture” progress, individual preferences are lost.
In contrast, PeopleMetrics’ Customer Engagement Management (CEM) dashboard system delivers real-time, individualized feedback for each customer. Our clients determine who in their company sees such data. Those who have access receive alerts regarding customers’ experience. These Action Alerts tell team members about chances to recover lost customers, grow new customers, and more. Our CEM solution also allows for improved customer communication through customized solutions, which could easily be developed as part of a business intelligence strategy. In fact, something as simple as a spreadsheet of customer alerts would allow managers and customer representatives to quickly, personally respond to customers’ concerns.
Dale Carnegie once said, “A person’s name is to that person the sweetest and most important sound in any language.” Today’s customers verify Carnegie’s sentiment—as we have seen, they want customized communication. Through real-time CEM solutions, companies can turn customer interactions into a personalized conversation, thereby increasing Customer Engagement.
Additional Resources
Real-Time Feedback From CEM Solutions Helps Schlesinger Stay On Top
Reward Programs: Are they Effective for Creating Engaged Customers?
3 Techniques for Customizing Customer Service
Tags: creating customer loyalty, customer loyalty, loyalty programs
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