Get With The Program (Or Not): It’s Time To Evolve Your Loyalty Strategy

In 2014, customer loyalty is a bit of an anomaly. Customers are empowered, informed, and have myriad options to choose from. They don’t really need to be loyal. But for companies doing business in the Age of the Customer, earning customer loyalty is more important than ever before. Satisfied loyal customers are the only reliable source of growth.

So, what do loyalty strategies look like today? For most companies I talk to their loyalty program is their strategy. While narrow, this approach doesn’t completely miss the mark. After all, the premise of a loyalty program is to create a mutually beneficial exchange for rewarding customers and collecting customer insight. And, for many marketers I talk to in retail, hospitality, and other industries, their most valuable customers are active participants in their loyalty program. The issue is that programs today are better positioned to “lock-in” customers rather than leverage member insights to drive personalization and improve the way they serve their customers. The traditional means of “driving” loyalty with points and discounts are no longer sufficient. It’s time for companies to evolve their approach to loyalty programs and strategies with a focus on relationships, advocacy, and engagement.

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Just Published: Our Forrester Wave™ Evaluation Of Loyalty Program Service Providers

We recently wrapped up our second evaluation of loyalty program service providers. From a potential pool of over 30 loyalty providers, we selected eight leading vendors that offer soup-to-nuts loyalty strategy, technology, and program management services. What has changed since our last evaluation? Notably, we found an increased focus on building programs that go beyond transactional rewards and loyalty technology. Wraparound program management services are still a key component of their solutions, but every vendor included in this Forrester Wave evaluation offers a productized platform that can be configured to meet client requirements.

In our final evaluation of eight vendors in“The Forrester Wave™: Loyalty Program Service Providers, Q4 2013,” we found a relatively competitive field of providers. Each firm has strengths and weaknesses in its current offering, but the leaders differentiate themselves through their forward-thinking company strategies. From a road map and development perspective, further increasing customer engagement capabilities, continually improving technology, and investing in more sophisticated loyalty analytics are major focus areas.

I want to extend my sincere thanks to each vendor in the report — Aimia, Brierley+Partners, Connexions Loyalty, Epsilon, Kobie Marketing, Maritz Loyalty Marketing, Olson 1to1, and Tibco Loyalty Lab — for committing to and participating in the often grueling Forrester Wave evaluation process. In addition, thank you to my CI colleagues Samantha Ngo, Carl Doty, and Shar VanBoskirk for supporting and editing this research.

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Make Mobile A Loyalty Priority

I belong to more loyalty programs than the average consumer. As a result, on any given day, my wallet is overflowing with loyalty cards and loyalty program related paraphernalia. At the register, I’m often rummaging through my purse to locate reward certificates, half-filled punch cards, coupons, and the like.More often than I would like to admit, rewards go unredeemed simply because I didn’t have access to them when I needed or wanted to make a purchase.

I am also — like 42% of US online adults — a perpetually connected consumer. Whether I’m “just looking,” comparing specific products and prices, searching for coupons in my email, or making a purchase, I rely on my smartphone as a trusty sidekick. In that vein, my mobile phone has recently helped me reduce some of the physical bulk that comes with loyalty program membership. I have an app that digitally manages all of my membership cards in one place, a loyalty program folder to corral branded apps that offer loyalty program functionality, and more than one retailer lets me scan rewards barcodes at the POS.

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Calling All Loyalty Program Marketers: Take Our 2013 Customer Loyalty Program Benchmark Survey

Do you manage or make decisions about your company's customer loyalty program? If so, we want to hear from you. We're teaming up with Loyalty360, The Loyalty Marketers Association, to investigate loyalty program size, organization, performance, strategies, and challenges. Take our 2013 Customer Loyalty Program Benchmark survey, and we'll send you complimentary a copy of the resulting research.

Take the customer loyalty benchmark survey

You can use the survey results to:

  • Spot trends and see best practices to incorporate into your loyalty strategy. 
  • Compare your program performance, spend levels, and loyalty technology adoption to those of other loyalty marketing professionals. 
  • Provide justification for a business case in your 2013 loyalty road map. 

The survey will close on Friday, February 15, and the completed research report will publish later this spring. I will also present the findings in a free Webinar and in advisory sessions to interested clients.

Take the customer loyalty benchmark survey 

Please share this blog post and survey link with friends and colleagues who share an interest in customer loyalty programs. Thanks in advance for your involvement!

330 Days Left To Mobilize Your Loyalty Program In 2013

New Year’s resolutions were so last month. But if devising a mobile loyalty strategy wasn’t already on your to-do list, you should add it ASAP. All signs point to continued explosive growth in consumer adoption and use of mobile devices across the customer life cycle — from discovery to purchase and beyond. And as the charter for loyalty programs expands to encompass emotional as well as transactional engagement, mobile will be crucial to meeting evolving consumer expectations. Still not convinced? Taking your loyalty program into the mobile channels yields three key benefits:

  1. More access to your members. Most loyalty programs interact with members through purpose-driven activities such as enrollment, online profile completion, point-of-sale (POS) transactions, and reward redemption. But this approach has a limited line of sight into further opportunities for engagement. Enabling a mobile strategy literally puts the loyalty programs in members' hands — wherever they are in the customer life cycle — and creates the potential for a wider range of customer interactions.
  2. Expanded member knowledge. Empowered consumers increasingly rely on mobile devices as companions to their interactions with a brand and generate behavioral, transactional, and location data. Since mobile channels are highly trackable, loyalty programs that collect that information can create deep customer insights that drive personalized communications, experiences, and offers.
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Shiny Pennies Beware: Our Latest Research Vets 13 Loyalty Program Tools

If Loyalty 1.0 was all about discounts, points, and miles, Loyalty 2.0 is all about differentiation and engagement. Competition for customer attention is steeper than ever, and companies are always looking for innovative ways to set their loyalty programs apart. But the loyalty landscape is chock full of shiny pennies (and some not-so-shiny pennies) claiming to offer a solution to this engagement problem. Throw rapidly evolving technologies, channels, and tactics into the mix, and marketers have a lot to consider when deciding where to make their bets.

If you’re nodding your head, you aren’t alone, and you are in the right place. Cutting through the clutter is exactly what our latest report, “TechRadar™ For Customer Intelligence Professionals: Customer Loyalty Programs, Q1 2013” (subscription required) is all about. We spent the past several months investigating the current maturity, business value-add, and future trajectory of 13 loyalty tools, including affiliate networks, card-linked rewards, coupons, location-based services, mobile applications, program websites, and social rewards. At a high level, we came away with two key observations:

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Drive Intelligent Customer Loyalty With Forrester's New Customer Loyalty Playbook

Over the past year-and-a-half, I’ve seen a surge of loyalty programs in the marketplace. And it’s not just existing programs expanding into emerging channels or revamping their reward mix. Industries that typically shied away from loyalty programs, like utilities, media and insurance, are jumping on the bandwagon. But although marketers understand that value of identifying, retaining, and improving relationship with their best customers, their execution usually doesn’t lead to lasting loyalty. Loyalty programs largely revolve around financial incentives that drive spikes in short-term behavior but don’t necessarily establish deeper or long-term customer relationships.

To add to that challenge, consumers see declining value in the programs that exist in the marketplace, and if marketers want to develop better relationships with their best consumers, their programs need more differentiation. And that’s where customer intelligence comes in. Loyalty programs generate a lot of customer data that often goes unused. Customer intelligence helps marketers create customer insights that improve their strategy and programs through targeting and segmentation, and customized offers. To assist marketers in applying customer intelligence and evolving their customer loyalty strategies, I’m excited to introduce Forrester’s Customer Loyalty Playbook.

The Customer Loyalty Playbook lays out the path to help you establish the right framework and mature your practices around executing loyalty programs that drive long-term customer engagement and incremental value. It contains twelve reports, focusing on four key phases:

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Joining The CI Analyst Ranks

I’ve been on the CI team for a few years in a supporting role and, more recently, working behind the scenes with Suresh Vittal to drive our research around loyalty. I’m excited to announce that, going forward, I will be the analyst leading our coverage of the technologies, services, and analytics that support customer loyalty.

My first report in this new role will provide best practices on building a world-class loyalty program. Then keep an eye out for an analysis of existing and emerging loyalty program features. Future research will dive into topics that include reward design, revenue models for loyalty programs, the future of loyalty, and more Wave evaluations of the loyalty vendor ecosystem.

I am looking forward to getting to know many of you better and following the evolution of this exciting space. Whether you have insights to share, questions to ask, or loyalty technology and services that you want to tell me about, I want to hear from you! Please engage with me via our Inquiry and/or Briefing teams, or track me down at Forrester’s upcoming Customer Intelligence Forum (April 18-19 in Los Angeles).