When it Comes to Loyalty Programs - Collaboration Drives Participation
By Mark Johnson President, Loyalty 360 - The Loyalty Marketer's Association | June 18, 2010
Two levels of collaboration:
1. Collaboration among Loyalty Partners
While companies continue to spend well over $1.3 billion on loyalty programs, most do not tap into their full potential. This is primarily because they have a Field of Dreams "if you build it they will come" mentality. Yes, guests may "come" to your loyalty program. But membership does not equal participation - and participation is the holy grail of loyalty programs. In fact, recent research shows that on average people belong to 14.1 loyalty programs but participate in only 6.2 of them.
Developing collaborative, multi-partner loyalty programs gives hotel marketers the insights and actionable data they need to fuel the highly coveted participation. By moving beyond transactional-based programs - which take a more simplistic view of customer behavior via looking at hotel-related purchases - collaborative programs open up new lines of communication between business partners that reveal a comprehensive, 360° view of consumer behavior. Loyalty leaders then use the predictive power of past actions to estimate and influence future behavior and drive participation.
The Kroger Co, the largest traditional supermarket retailer in the U.S., is a great example of a company that has linked with an expanding number of partners to offer a collaborative loyalty program that provides a plethora of reward offerings to its customers - and a wealth of information to its marketing team. Kroger's loyalty card provides customers with savings on groceries, gasoline, general merchandise, pharmacy needs and Kroger brands. By capturing and analyzing the data generated via the loyalty program, Kroger has been able to pinpoint the buying habits of its customers so specifically that they've segmented their 65 million shoppers into seven distinct groups. In addition to using this information to more accurately target their own messaging and customer loyalty initiatives, they also sell this data to their larger customers to enhance their marketing efforts.
The hospitality industry is not without its own best-practice examples. A coalition of sponsors, reward suppliers, and affiliates, the AIR MILES Reward Program has achieved an almost iconic status in Canada with 97% of Canadians knowing it well. The collaborative program enjoys the highest activity rates of any mass loyalty program, with approximately two-thirds of all Canadians actively collecting reward miles. Program partners benefit from a shared consumer database and deep-dive analytics that reveal who is buying what, where, when, and why. And that - the insights inherent in the data that can be mined from the program - is what fuels customer loyalty. Armed with a 360° view of customers, the program partners are better able to put customer interests first, personalize the shopping experience, and convey messages that bolster the customer's affinity with the brand. At the end of the day, these savvy marketers address not just purchasing behaviors but the fundamental drivers of customer loyalty.