Businesses launch loyalty programs for a number of reasons. Increased customer acquisition, retention, lifetime value, and ultimately, profitability are all goals in the quest to engage customers at a deeper level.
In recent months, we’ve seen a number of new loyalty programs announced or revamped by major brands, including Staples, Best Buy, Orbitz and AT&T. Even affinity-based communities are using the principles of loyalty programs to achieve their objectives. For example, Club Hockey Canada was created by Hockey Canada to offer hockey families ways to earn “PUCKBUCKs” currency to help lower the cost of hockey, and is supported by such national Canadian brands as Canadian Tire, Boston Pizza and Air Canada.
However, one critical foundational component that is often lacking from traditional loyalty programs is intelligence. Intelligence allows companies to take the customer insight and predictive modeling of traditional loyalty programs to the next level. Rather than tiered loyalty programs that rely on yesteryear’s customer segmentation, intelligent customer engagement works on an individual basis, in real-time, and offers customers choice of incentives to drive measurable, incremental and profitable behavior change.
A few key ways we have seen this infusion of intelligence supercharge traditional loyalty programs are:
- Businesses taking a step back and ensuring that their customer engagement programs are intimately connected to their overarching business strategy and processes. Key examples include transitioning from batch-fed data that is used to re-engage customers post-transaction to using intelligent customer engagement programs to deliver customer value in real-time, across multiple channels.
- Revamping programs that simply give away margin by incenting behaviors that customers were likely to perform anyway, or programs that use broad-based tier systems to segment and incent customers. Intelligent customer engagement programs are helping companies identify and value each individual customer’s behavior gaps (the valuable behaviors they are not currently performing). This puts organizations in a much better position to understand each customer’s full profitability potential.
- Through a clear understanding how much value (profit) each customer is able to drive for the business, using individualized data-driven incentives to motivate behavior change. This means that companies are able to tweak the value of each customer’s incentives so that they are directly related to the value that customer’s incremental behaviors deliver to the business. This guarantees a positive ROI and is a sure-fire way to maximize the profitability of each customer.
Whether launching a new loyalty initiative, or looking for ways to reinvigorate an existing one, it’s time for companies to get smart about their loyalty programs by using intelligent customer engagement to unlock their customers’ profitability, one customer at a time.