There's Nothing Cheap About Loyalty

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Customer Engagement
Customer Experience
In my new favorite movie "<a href="http://www.theupintheairmovie.com/">Up in the Air</a>," The George Clooney and Vera Farmiga characters, both frequent fliers who met for the first time, sit in an airport lounge, impressing each other with the amount of loyalty cards they carry in their wallets and how many frequent flier miles they've accumulated. At one point, the Farmiga character says to the Clooney character "We're two people who get turned on by elite status. I think we're starting at cheap," to which Clooney responds "There's nothing cheap about loyalty."

In my new favorite movie "Up in the Air," the George Clooney and Vera Farmiga characters, both frequent fliers who met for the first time, sit in an airport lounge, impressing each other with the amount of loyalty cards they carry in their wallets and how many frequent flier miles they've accumulated. At one point, the Farmiga character says to the Clooney character "We're two people who get turned on by elite status. I think we're starting at cheap," to which Clooney responds "There's nothing cheap about loyalty."
He was right. According to a recent report by loyalty program watchdogs, Colloquy, the average U.S. household is enrolled in 14.1 loyalty programs, which marketers spend as much as $2 billion annually to operate.

In addition, a CMO Council study, "Leading Loyalty: Feeling the Love From Loyalty Cards," presented by IBM .and Ricoh this week, shows that 16 percent of marketers said they've invested between $100,000 and $500,000 to date on their loyalty programs, while 9 percent has invested between $500,000 and $1 million, and 44 percent has spent less than $100,000.

While these numbers show marketers' financial dedication to loyalty programs, in the the CMO Council report they admit they are not fully leveraging the opportunity to reach, engage, and further the relationship with high-value advocates.

The challenge facing marketers today is how to demonstrate the return of these programs, beyond the measure of membership or program participation. Some primary obstacles revealed in the report include:

- Measuring marketing value and effectiveness (42 percent)
- Collecting, integrating, and maintaining customer data (41 percent)
- Deriving valuable insight and intelligence (38 percent)
- Delivering more personalized offers and inducements (35 percent)
- Creating more customized communications (33 percent)

Despite these challenges, investments in loyalty programs will continue as nearly 80 percent of marketers are committed to maintaining or further funding loyalty programs as customer retention and relationship building vehicles. More than 34 percent report they are significantly increasing their commitments, and 45.9 are maintaining their current commitments. Just 4 percent expect to discontinue their programs.

While only a quarter of respondents say they are working on initiatives to mobilize influential customers, 42 percent say the relevance and depth of their loyalty programs is improving. However the 9 percent in the report who says their data is excellent reveals how much work is still necessary.

According to the CMO Council, deeper engagement awaits. The report states: "Marketers must move beyond viewing these programs being single streams of outbound communications to drive sales, increase outbound promotions or free/discounted offers. Customers are craving deeper engagements and are assuming that program membership also brings a more personalized engagement. In fact, for many consumers, their payoff for loyalty translates into a brand bringing them something made just for them, even if it is as simple as an offer on a valued product at the exact time they need it."

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