Think Customers: The 1to1 Blog

Hi Greg --

You make a great point.

Loyalty, or for our purposes here lets call it 1to1 loyalty, is in fact earned. We have done a fair share of research this year trying to answer the question: what drives loyalty (in both B2B and B2C contexts)?

Time and again, the responses stress the fact that relevant experiences drive loyalty; that earning points is a mode of currency but not a driver that keeps customers loyal; and that customers are less sensitive to price if you provide them with relevant offers, rewards and communications that meet their individual needs.

In other words, companies must give value to get value, and this often means going beyond earning points or price discounts. Don't get me wrong, points and price discounts remain tools of the loyalty marketer, but they can't represent the heart of your loyalty strategy. Those companies able to use customer data more strategically to "treat different customers differently" will be able to drive true 1to1 loyalty, where customers are engaged at the emotional and behavioral levels--which ultimately drives profits.

I'm not sure that these programs inspire true "loyalty." I think that true loyalty is something that is earned and not bought.

In a recent post elsewhere on this site about Hannover Re, it was mentioned that they differentiate between "loyal" customers and "habitual" customers.

I wonder if these earn and burn programs even inspire habitual customers. Any thoughts?

Responding to the 'earn & burn' questions asked during the webinar...

Earn (double points, bonus points, new earn partners, earn for non-cash transactions, etc) & Burn (rewards and redemption offerings, particularly tangible and experiential rewards, etc) are a challenge to maintain as a unique point of difference.

Frequently loyalty program managers will hold a conversation to the effect of “We need a reward offering that will really set us apart” or “If we just offer more earning value, we’ll get more customers joining and more frequent usage….let’s do it”. The resulting challenge is that the advantage from any of these types of approaches will inevitably be replicated by your competition, taking you quickly back to parity…

However, it is possible to make Earn & Burn tactics more valuable by constantly evolving your offering via a foundation of customer insight. By ensuring that what yuo are offering is what "your customers" want, this can help you to create a competitive advantage that is enduring…

Responding to Bob who asks, "Any other examples of accelerating the product development cycle via Loyalty Program insight?"

Another good example is a US retailer who used the loyalty program to identify customers for inclusion in focus groups - in this case, identifying people who had bought certain products in the past. The extension was to actually recruit those customers as product testers (they got free prototype merchandise in exchange for their feedback). This may not have accelerated the product development cycle, but certainly helped make sure they were talking to the right customers.

During the 1to1 webinar, several attendees have asked the following question: Luc Bondar mentioned that "earn and burn" in loyalty program is a fleeting competitive advantage. Why?

Dialogue infers a two way communication, with both parties actively listening and responding to one another with relevant information and value. In considering how to maintain an effective dialogue, first you need to have the means to ‘listen’. You could begin by asking yourself how you capture what your customers are telling you about themselves, and importantly, what they want.

“What they want…” is not always conveyed explicitly, you need to examine the data you have to understand who these customers are via their interactiosn, the products they use, their preferences, the prices they pay, etc…

Then you would use this insight to offer information and value back to them that is relevant at pertinent moments in their relationship.

And you also need to do more than just understand what channel your customers want to engage via – this is essentially a hygiene factor for your customers today – they expect you to know and remeber this…

Hello all! Another question from today's 1to1 Media webinar onloyalty programs, this one from Bob:

Any other examples of accelerating the product development cycle via Loyalty Program insight?

Integrating loyalty programs - or other programs - that have traditionally been run across divisions can be difficult. Usually what it takes is a higher-level project sponsor to take the viewpoint of the customer, rather than the viewpoint of the particular division. It also comes down to giving credit to each division for potentially 'taking one for the team'. In the case of financial services, this might mean stepping back efforts to drive credit card cross-sell in order to allow the mortgage side of the house (line of credit) to succeed. The problem comes when these divisions are incented to compete - often to the detriment of the overall business.

Hello all! Here is a question from Michelle, an attendee of today's 1to1 webinar:

What are some of the most effective ways to maintain dialogue with your customers?