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Paradigm Shift: The Changing Face of Loyalty Marketing

Photo: Courtesy of Anna Dziubinska

Loyalty marketing is more than just a punch card that will get you a free drink. At the highest level,it is the culmination of the customer experience: the strategies, technology, touch points and subsequent behavior that positively impact the bottom line. And with the advent of data mining and the insights that are gleaned from this wealth of information, loyalty marketing is continuing to evolve and drive the customer experience.

Every business should be looking at how they engage with customers and what they can do to improve this engagement. When it comes to allocating the marketing budget, the companies that are doing well are shifting their money to investing in the customer experience.

Building trust

The definition of loyalty is unique — it’s changing and no longer focused on programs, but on driving process and engagement. The shift in spending is dramatic, especially for those who are doing very well.

In a recent survey of the loyalty marketing landscape, I found some trends that define the current and future state of loyalty marketing. One salient attribute of companies producing outstanding customer experiences is a true commitment to doing so—which is the only way to achieve real results. I call this type of commitment “entrepreneurial,” because full commitment demands risk-taking and experimenting with approaches that may not have a proven ROI.

We must stress the importance of confidence in fueling this risk-taking approach, which enables innovation, and ultimately drives revenue. This confidence comes from having the right support and systems in place, with a test and learn approach.

Corporate transparency

Almost 70 percent of marketers who spend on loyalty believe they are innovative, which indicates a high level of confidence and risk-taking that helps drive results.

Blended as part of the marketing mix, organizations making those commitments and taking those risks are doing very well, because it is part of their process, which allows them to do great things.

Other takeaways from my survey include the importance of bench-marking to see how a program is performing vs. the market, rather than measuring performance by incremental gains. When you gauge your performance against the market, this helps justify budget increases and investing in innovation. In addition, there is a trend towards transparency with customers—respecting their time by being as upfront and clear as possible builds trust and bolsters the overall experience.

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