Why Reward One Loyal Constituent When You Can Reward TONS?
Originally published on SpotRight.com.
Are you running loyalty programs? If you are, read on if you’re interested in a radical new approach that leverages a social view of your customers to increase the return of your campaigns. Skip to paragraph five for the meat. If you’re not familiar with loyalty programs, read the first few paragraphs to get some grounding.
What (Broadly) is a Loyalty Program?
Leading retailers, nonprofit organizations and other direct to consumer marketers have developed retention or “loyalty” programs to keep their best customers engaged and to get new customers to spend more money. This is obviously a broad class of program that over a beer, the experts would argue the finer points.
Look in your wallet. Have you got a Starbucks card or a United frequent flyer number? In your inbox do you have email from Urban Outfitters that asks you to come back and get 30% off a hipster t-shirt? Yep, those are the promotional vehicles associated with different kinds of loyalty programs. They’re all trying to do the same result – get one person to buy one thing.
What Traditional Loyalty Targeting Does Well
Most loyalty programs take a scientific approach to offering discounts and incentives to a given consumer based on *their* past conversion and value. So, the logic goes, we’d look at some hypothetical customer’s (let’s call him Jeff) past purchase and send him a promotion with a better or worse offer based on what additional dollars he was likely to spend. The promotion we’d send him would be focusing mostly on getting *him* to convert and make another purchase. Most marketers would work these promotions into their regular slate of campaigns across a year. Some, with the means, would tie it into most of what they do – like the airlines and retailers with private label credit cards.
What the Old School Did Well and Not-So-Well
The old school targeting approach does one thing well – it made use of some narrow, but highly predictive data on a single consumer to get Jeff (AND ONLY JEFF) to do something. Sure some promotions had a friends and family tone, but if they did they were sprayed indiscriminately and (if targeted at all) used primarily Jeff’s value for selection.
The Opportunity We Have Today
Today, we can learn lots about Jeff from his activity across the Web. This radical new approach helps marketers target consumers with more enticing offers. Using a socially enlightened consumer view, marketers can optimize their campaigns not just for direct conversion, but also for earned media, viral acquisition and conversion.
Exploring the New *SOCIAL* Loyalty
Admittedly we’re embarking on a new frontier. No, I didn’t invent word of mouth marketing, nor did I invent graph theory. But, here are the things we’ve got in the labs to explore and make this all work.
Understanding the Customer – We’ll need to look beyond the typical recency, frequency and monetary value of our Jeff’s behavior. We need to look at his likelihood to affect lots of others’ behavior. Things like his identity, content he’s published, network-size and engagement data will be critical to us.
Selection – We should focus on not just identifying people like Jeff who are likely to convert themselves. Instead, we need to pair those criteria with things like breadth of presence, size of network, relevant affinity, reach of content shares, and social recency to find people who are likely affect others’ behavior.
Promotion – We’ve got to restructure our offers based not just on immediate conversion from Jeff, but rather on the likelihood that a promotion will get them to share and convert Jeff’s friend and wife and coworkers. This will include things like discount size, creative, call to action, timing, and, of course, content.
Media Mix – We’ll need to be sure the promotions are developed in a way that maximizes sharing, conversion, and measurement across many different media. So, the creative in the email promotion that once offered Jeff a coupon from Wendy’s for a free Frosty needs to be shareable across different networks. Think about the Tweet content versus the Pinterest pins.
Measurement – Trying this new approach demands we measure its impact on the bottom line. We need to broaden the measurement framework beyond promotion and response by a single customer. We need to be able to measure and adjust our methods based on whether Jeff shares the promotion, the location/volume of their sharing of the promotion shows up across the social Web, and how many people it converts or adds to our file.
So, there it is – I’ve laid the case for making your loyalty program better by leveraging a social view and the social nature of your customers. We’re working on some great data models, campaign designs and measurement tools in the labs, which we’ll share shortly.