Contributed by Adhish Kulkarni, January, 2022
If you’re reading this article, the chances are that either now, or at one time or another in the past, you’ve been faced with the task of designing an effective customer value management or loyalty program. The question of how to do that is an obvious one; arriving at the right answer, one that results in not just a program but an effective and successful one, is less easily achieved.
It matters. Effectiveness is what will eventually define and measure your program’s success. Based on our team’s many years of experience in the field, here’s our two-part guide to the key points you should consider at the outset, when thinking about the sort of program you need to put together.
Design and understand your objective
If you are thinking of launching a new program, before it leaves the drawing board your first step should be to decide on its prime strategic objective. Sounds straightforward, but many overlook this key detail. Identifying and understanding your overriding goal is important because it will drive many of your subsequent decisions.
1.Increasing/leading in customer satisfaction and extending tenure
If this is your key metric (and remember, it’s only one of the possibilities), you will need to incorporate mechanics that allow customers to earn over time, show progress towards goals, be rewarded for tenure, etc. This, from your perspective, will drive the need to have a framework of tiers or points that benefit customers for staying longer and spending more.
2. Creating a self-funded/revenue generating program
This goal can serve both your loyalty and retention objectives. It suggests there will likely be a need to incorporate mechanics that enable advertisers to target customer segments/ personas (as opposed to specific customers!) within the program framework. This could involve allowing non-customers to use the program (because many care about eyeballs driving ad revenue) but at the same time making the offers better for loyal customers (and even having a special category for ex-customers). The idea here is that advertisers care about not just volume but targeting, and such a framework can, for instance, make it easier for you to acquire (or re-acquire lost) customers if you maintain a relationship with them.
3. Creating differentiation and category ownership (even across borders) to enhance brand/market positioning
This goal suggests there’s a benefit from incorporating a program design that enables ownership of a specific reward category. Before the pandemic, cinema/movies was a good example of one such category due to its universal appeal. As a result, telcos in many markets built loyalty program around film tickets (which have high perceived value and are extensively popular, but are also beneficial because they drive footfall in low traffic periods) and merchandise sales. Post-Pandemic, many other categories remain open and are likely to prove equally popular… examples such as health & wellness, food (delivery mainly) and online shopping come to mind. At present, there’s relatively few telcos who have really grabbed leadership positions in these categories, so the field is primed and open for innovation and the opportunity to win market share.
There are a lot of other possible objectives to consider as foundations for your program such as increasing digital maturity, pushing convergent products or building readiness for the IoT world. The key to success is mixing and matching objectives with methodologies, right from the program’s first principles. An effective loyalty or engagement program doesn’t use the latest technology to throw a blanket over a diverse audience. That is no longer a strategy; instead, it selects a target goal from among many, selects a method of engaging that target from among multiple alternatives, and then executes the program with clarity and efficiency. The maturation of loyalty and engagement is all about applying focus.
With that in mind, and regardless of your own individual priorities, keep in mind that the first step you need to take is to define where you want to go and then, after that, to fit the concept/program mechanics that are most likely to help you to meet your target.
Obviously, budgets and time horizons impact ambitions; for example, a tactical short-term approach won’t allow you to build a powerful marketing asset like T-Mobile Tuesdays, Orange Wednesdays, etc. But don’t lose sight of the prize.
In the next blog we’ll look at the characteristic of an optimal program, especially those beyond the traditional transactional and emotional vectors.